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3 Brokerages Suggesting Buy On This Banking Stock With Upside Potential of 18%

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The Reserve Bank of India (RBI) claims that India's banking system is adequately capitalized and regulated. The country's financial and economic conditions are significantly superior to those of any other country on the planet.

 

HDFC Bank stock has a buy rating from three notable brokerages: ICICI Direct, Motilal Oswal, and IDBI Capital, with an upside potential of 18%.

HDFC Bank Limited, headquartered in Mumbai, Maharashtra, is an Indian banking and financial services firm. As of April 2021, HDFC Bank is India's largest private sector bank in terms of assets and market capitalization.

3 Brokerages Suggesting Buy On This Banking Stock

3 Brokerages Suggesting Buy On This Banking Stock

HDFC Bank TP Upside potential CMP
Motilal Oswal Rs 1,800 18% Rs 1,522
IDBI Capital Rs 1,790 18% Rs 1,522
ICICI Direct Rs 1800 18% Rs 1,521

Buy HDFC Bank; Target Of Rs 1800: ICICI Direct
 

Buy HDFC Bank; Target Of Rs 1800: ICICI Direct

HDFC Bank is a leading private sector bank with a long history of continuous expansion and operational performance. In comparison to its peers, the bank has maintained higher return ratios, resulting in premium values.

With a loan book of about Rs 11 lakh crore, it is the largest private sector bank. In the previous many years, the company has consistently performed with a +4% NIM and a +15 percent RoE.

"HDFC Bank's share price has grown by ~2.5x over the past five years. We remain positive and retain our BUY rating on the stock Target Price and Valuation: We value HDFC Bank at ~3.7x FY23E ABV and Rs 50 for subsidiaries to arrive at a revised target price of Rs 1800," ICICI Direct said in its research report.

CMP: Rs 1521 Target: Rs 1800 (18%) Target Period: 12 months

Key triggers for future price-performance:

Strategy to expand segments, geography & digital focus to aid future growth

Stressed accretion elevated; higher specific provision and contingency buffer of 70 bps provides comfort

Encouraging demand resolution & superior franchise to aid earnings revival.

Alternate Stock Idea: Axis Bank, in addition to HDFC Bank, is a favorite of ours. Strong liabilities franchise, sufficient capitalization, and a healthy provision buffer to support business development and profit trajectory. BUY with a target price of |Rs 900, it added.

Buy HDFC Bank; Target Of Rs 1800: Motilal Oswal

Buy HDFC Bank; Target Of Rs 1800: Motilal Oswal

HDFC continues to outperform the market in terms of advances, owing to strong trends in Commercial and Rly consistent, however continuing embargoes have put pressure on rural Banking loans. The bank's operating performance has been large margins. Due to collection difficulties caused by the second COVID wave, asset quality has worsened slightly.

The bank continues to make additional contingent provisions to further strengthen its Balance Sheet. The total restructured book increased to 0.8% of loans (v/s 0.6% of loans), however, overall stress formation remains under control. In the near term, the lifting of RBI restrictions remains a key monitorable. We broadly maintain our earnings estimates and project 18% PAT CAGR over FY21-23E. We maintain our Buy rating with a TP of INR1,800 per share (3.5x FY23E ABV). Motilal Oswal said in their research report.

CMP: INR1,522 TP: Rs 1,800 (+18%) Buy Earnings/PPOP in line; margin remains under pressure on an unfavorable asset mix, it added.

Buy HDFC Bank; Target Of Rs 1790: IDBI Capital

Buy HDFC Bank; Target Of Rs 1790: IDBI Capital

HDFC Bank continues to command the highest market share amongst private banks. We believe HDFCB to traverse through these tough times and will gain market share led by a strong leadership position across segments, large distribution, digital focus, and strong capital adequacy. We remain structurally positive on HDFCB given its superior credit underwriting, structurally better NIM, and the ability to maintain higher RoA among its peers, IDBI capital said.

As overall economy expected to improve in H2FY22, we believe that HDFCB would see the best revival in growth within the sector. We have largely retained our estimates and have BUY rating with the new target price of Rs.1,790 (earlier 1,740) based on P/Bv of 3.6x FY23, it added.

Disclaimer

Disclaimer

The opinions expressed in the article should not be interpreted as investment advice. Because stock market investments are risky, investors must conduct their own research based on their risk tolerance. The author, brokerage firm, or Greynium Information Technologies Pvt Ltd are not liable for any losses incurred as a result of a decision based on the above article. As a result, investors should proceed with caution, as markets have risen significantly.

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