On Monday, shares of HDFC Bank rose as much as 3 percent to Rs 1,305.50 before cooling off. On Saturday, the private bank reported an 18 percent increase in its net profit for the September ended quarter at Rs 7,513.11 crore from Rs 6,344.99 in the same period a year ago.
After the consistent profit reported by the country's second-largest bank, most brokerages have turned bullish on the stock.
Edelweiss Securities has a "buy" rating on the stock with target raised to Rs 1,490 from Rs 1,335 per share. It said that the bank has beaten its profit estimate on account of higher other income.
CLSA also has a "buy" call on HDFC Bank with the target raised to Rs 1,525 from Rs 1,450. Collections and new business trends are strong, CLSA said, adding that asset quality commentary is reassuring.
Jefferies has a "buy" rating with a target of Rs 1,450 per share. It said that that the September collections indicate restructuring to be at just 1-2 percent of loans.
Macquarie has a "outperform" rating on the bank with target raised to Rs 1,489 per share from Rs 1,219 earlier. The brokerage said that the management painted a very positive outlook on asset quality.
Yes Securities raised its one-year target on the stock to Rs 1,500. "HDFC Bank, on stand-alone basis, delivered a stellar show with 6% core PPOP beat on our estimates, largely driven by robust recovery in core fee income. The bank was prudent to provide for impending slippages (from SC order + early recognition) and augment its Covid shield (now at 65 bps of Adv.). We expect loan growth to not decelerate substantially in H2 FY21, aided by festive treats program and acceleration in economic activity," it said.
HDFC Bank's net interest income (NII) for the September-ended quarter grew by 16.7 percent to Rs 15,776.4 crore from Rs 13,515 crore in the same period last year, driven by asset growth of 21.5 percent and core net interest margin of 4.1 percent during the quarter.
With a positive outlook on the bank, Lalitabh Srivastava, AVP-Research at Sharekhan, told The Economic Times that "there is going to be a market share gain for some players like HDFC Bank at the expense of some of the other weaker players," as the bank, which has a strong retail franchise, "strategically targets segments where it is seeing longer-term growth as well as higher profitability."