Motilal Oswal has given Buy recommendation for HDFC Bank recommended buy rating on the stock with a target price of Rs 2000 in its research re with a target price of Rs. 2000 in its research report issued on Jan 15, 2022

Motilal Oswal’s research report on HDFC Bank

HDFCB reported an in line quarter, with NII/PPOP growth of 13%/10.5% YoY. PAT grew 18% YoY to INR103.4b (in line). Profitability stood stronger despite the bank creating additional provisions of INR9b, taking the total buffer to ~INR86.4b (~70bp of loans). The bank witnessed a healthy pickup in business as loans grew 5.2% QoQ. The Retail segment grew 13.3% YoY, while Commercial and Rural Banking rose at a robust 29.4%. CASA deposits grew 24.6% YoY and the mix now stands at 47.1% (+30bp QoQ). On the asset quality front, GNPA/NNPA ratio improved by 9bp/3bp QoQ to 1.26%/0.37%, with slippages at INR46b (1.6% of loans). The restructured book moderated to ~1.4% of loans (v/s 1.5% in 2QFY22). The management said the net impact of the restructured book on NPAs is likely to be 10-20bp. Healthy provision coverage, along with a contingent provision buffer, provides comfort on asset quality.


Healthy provisioning coverage and a contingent provision buffer provide comfort on asset quality. Pick up in loan growth, particularly Retail, would aid NII and margin, which would drive profitability in the coming quarters. We estimate HDFCB to deliver ~20% PAT CAGR over FY22-24E, with a RoA/RoE of 2.1%/18.1% in FY24E. We maintain our Buy rating with a TP of INR2k (3.6x Sep’23E ABV + INR119 from its subsidiaries).

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