Prabhudas Lilladher has given Buy recommendation for HDFC Bank with a target price of Rs. 1735 in its research report issued on Apr 18, 2021
Prabhudas Lilladher’s research report on HDFC Bank
HDFCB’s earnings of Rs81.8bn saw a 6% miss from our estimates (PLe: Rs86.8bn) on higher contingency provisions of Rs13.0bn (Rs8.0bn for asset quality) and slightly slower NII. Although, PPOP saw a 5% beat led by good other income (treasury/recovery from w.off) and controlled opex growth. Asset quality was steady sequentially, although added Rs8.0bn to COVID contingency provisions (non PCR related) to take it to Rs58.0bn or 60bps of loans. High level financial indicators like cash flow improvements, increase in spends and increased customer additions continue to show robustness. While, certain deterrents have occurred like higher cheque bounces and few states pulling down collections. HDFCB remains a strong franchise with solid cross cycle asset quality and superior return ratios.
We retain BUY with revised TP of Rs1,735 (from Rs1,690) based on 3.6x Mar-23 ABV. Out TP increase has been led by 2-3% increase in BV as bank has not declared any dividend for FY21 similar to FY20 and will await RBI guidelines on same.