HDFC Bank Share: India's Largest Bank Rises 2% After 3-Days Losing Streak; Buy For TP Over Rs 2,000

India's largest bank, HDFC Bank emerged among the top gainers in Saturday's trading session. The private bank gained by 2% on BSE. This comes after HDFC Bank recorded its worst fall since the Covid-19 crash. With the latest upside, HDFC Bank halted its 3-consecutive days losing streak. There is a buying-on-dips opportunity in HDFC Bank shares for a target price of more than Rs 2000.

HDFC Bank gained by 1.7% on BSE to hit an intraday high of Rs 1,495.65 apiece with a market cap of nearly Rs 11.28 lakh crore. After its Q3 results, HDFC Bank shares stepped into a three-consecutive day losing streak from January 17th to 19th, sliding down by over 14%.

The lender lost over Rs 1 lakh crore of market cap during the selloffs. The reason behind sharp selling in HDFC Bank was due to missing estimates in net interest income, and pressure in interest margins.

In Q3FY24, HDFC Bank's net profit came in at Rs 16,372 crore, registering a growth of 33% from Rs 12, 259 crore a year ago same quarter. While its net interest income (NII) saw a growth of 24% YoY to Rs 28,470 crore. While the bank's core net interest margin was at 3.4% on total assets, and 3.6% based on interest-earning assets.

Pre-provision operating profit stood at Rs 2,365 crore, up by 24.3%. In terms of asset quality, gross NPA was at 1.26%, down from 1.34% in Q2FY24. Net NPA came in at 0.31% of net advances by the end of Q3FY24.

Buy HDFC Bank For TP Of Over Rs 2,000:

Talking about the performance, Prabhudas Lilladher in their research note said, "HDFCB saw stable quarter; NIM (in-line) improved by 7bps QoQ to 3.73% as excess liquidity was utilized to retire wholesale deposits, thereby increasing LDR by ~3% QoQ. Loan growth at 4.9% QoQ was led by CRB, housing and CC. With system liquidity in shortfall and peak LDR at 77.4%, deposit growth should be faster for current loan momentum to sustain, failing which system loan accretion should reduce in FY25/26E, compressing LDRs."

Factoring a 15% CAGR for HDFCB, Prabhudas note added, "We trim loan growth by 1% in FY25/26E which would impact NIM by 4/5bps. This could be partly offset by lower opex given a softer deposit requirement; our core PAT reduces by 2%/4%. While falling LDR could pressurize NIM, bank would focus on (1) controlling deposit cost and (2) improving share of CASA and higher yielding retail. Maintaining multiple at 2.7x, we revise TP to Rs2,000 from Rs2,025. Retain 'BUY'."

In its research note, Religare Broking said, "We remain positive on HDFC Bank as the bank is seeing healthy credit demand. The management expects the margin to improve in the coming quarters as the deposit pace picks up and interest rates moderate. The bank continues to maintain healthy asset quality."

Further, Religare's note said, "The bank is also yet to see the synergies from the merger which will enable in higher cross-selling of products to existing customers. We maintain a Buy rating on HDFC Bank and revise our target price to Rs 2,010 valuing the bank at 2.4x of its FY26E Adj. BV. "

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.