KR Choksey has given Buy recommendation for HDFC Bank with a target price of Rs. 1836 in its research report issued on Oct 18, 2022

KR Choksey’s research report on HDFC Bank

Net Interest Income (NII) for Q2FY23 stood at INR 2,10,212 Mn, a growth of 18.9% YoY/ 7.9% QoQ led by robust growth in advances and improvement in yields. The Core NIMs were stable at 4.1% in Q2FY23, an improvement of 10 bps QoQ. Pre-Provision Operating Profits (PPOP) grew 10.0% YoY/ 15.3% QoQ at INR 1,73,922 Mn. Provisions for Q2FY23 were at INR 32,401 Mn as against INR 39,247 Mn in Q2FY22. The credit cost for Q2FY23 stood at 0.87% vs 0.91% in Q1FY23 and 1.30% in Q2FY22. Net Profit stood at INR 1,06,058 Mn, an increase of 20.1% YoY/ 15.3% QoQ. The GNPA were 1.23% as of September 30, 2022, vs a comparable 1.35% as of September 30, 2021. NNPA for the quarter ended stood at 0.33% vs 0.50% as of September 30, 2021, of the net advances. Advances as of September 30, 2022, were at INR 1,47,98,732 Mn, a growth of 23.4% YoY/ 6.1% QoQ. The deposit grew by 19.0% YoY/ 4.3% QoQ at INR 1,67,34,080 Mn.


We maintain our target price at INR 1,836 per share (unchanged), implying a P/ABV multiple of 3.4x to the adjusted book value of INR 536 per share, showing an upside of 27.0% over the CMP. Accordingly, we reiterate our BUY rating on the shares of HDFC Bank Ltd.

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