1:2 Split, Rs 60.5/Sh Dividend In 5 Yrs; HDFC Bank Stock Rises 20% In 6 Months, ADR Up 13%; Geojit Says BUY

India's largest banking stock, HDFC Bank has made a significant turnaround in the past six months, including its American Depositary Receipts (ADR). In the first three months of 2024, HDFC Bank and its ADR were among the top losers in the large-cap basket, however, the year FY25 has been fruitful so far. In Q2FY25, the lender saw stable margins and robust deposit growth. While its future performance is expected to be steadily driven by enhanced portfolio mix. There is room for more buying in HDFC Bank with a target price crossing Rs 1,900.

HDFC Bank Share Price:

On November 21, HDFC Bank's share price closed at Rs 1741.95 apiece, with a market cap of Rs 13,31,360.96 crore. The stock is near its 52-week high of Rs 1,791.90 apiece which was recorded on July 3rd, 2024.

HDFC Bank started the year 2024 at Rs 1,700.65 apiece on January 1st, however, panic over its loan growth after the merger of parent company HDFC, led to a frenzy selling so much so that the stock was down to its 52-week low of Rs 1,363.45 apiece on February 14 of the year. During this period, the stock was down by nearly 20% on BSE. However, in the past six months, HDFC Bank stock has recovered significantly.

HDFC Bank's share price has surged by 19.44% in six months. While its ADR which is currently at $63.32 on NYSE, has soared by 12.73% in a half-yearly period.

BUY HDFC Bank Stock?

According to Geojit, HDFC Bank's Q2FY25 performance was marked by stable margins and robust deposit growth, positioning the bank to capitalise on economic improvements and credit growth opportunities through its ongoing efforts to optimise its loan-deposit ratio and gradual replacement of high-cost borrowings.

Additionally, it pointed out that the bank's strategic initiatives are expected to positively impact its performance, driven by improvements in loan mix, funding costs, credit-deposit and CASA ratios, and the distribution network.

Further, the brokerage highlighted that the bank's future performance is expected to be driven by an enhanced portfolio mix, and retail loan mix expansion, leading to improved credit-deposit ratio and steady margins in the medium term.

On the valuation, the brokerage said, "As a result, we remain optimistic about the company's long-term growth and reiterate our BUY rating on the stock, based on 2.6x FY26E BVPS, with a revised target price of Rs. 1,931."

From the current market price, there is the potential of an 11% upside in HDFC Bank ahead.

HDFC Bank Corporate Actions:

Data from BSE showed that HDFC Bank has given a significant amount of dividends to its investors in five years, especially after its second stock split.

Stock Split: The latest stock split by HDFC Bank was on September 20, 2019, in the ratio of 1:2, where the face value of Rs 2 was cut to Rs 1. The bank carried its first stock split in the ratio of 1:5 on July 16, 2011, where the face value of Rs 10 was cut to Rs 2 each.

Dividends: Since its second stock split, data showed that HDFC Bank has rewarded dividends up to Rs 60.5 per share in five years. HDFC Bank delivered dividends of Rs 19.50 per share, Rs 19 per share and Rs 15.50 per share for three consecutive years, and its ex-dates were in May 2024, May 2023, and May 2022. Before that, the lender paid up to Rs 6.50 dividend per share and the ex-date was on June 29, 2021. These dividends are paid after its last stock split.