Buy HDFC Bank Stock With Target Price of Rs. 1,800: Prabhudas Lilladher

Gaurav Jani, a research analyst of Prabhudad Lilladher has given a buy call on a large cap stock from banking sector in the latest report. The research analyst of the brokerage firm is highly bullish on the HDFC Bank and has given a target price of Rs. 1800 for the stock.

The stock is surging to the upside from the past few weeks, the stock had seen a downfall in the starting of this year but has shown a strong reversal from the downtrend and moving to the upside with strong momentum.

As per the report of Prabhudas Lilladher, the stock has potential to move more than 19% to the upside from current market price.

Outlook of HDFC Bank

One of the first organisations to get "in principle" authorisation from the Reserve Bank of India (RBI) to establish a bank in the private sector was the Housing Development Finance Corporation Limited (HDFC). HDFC Bank was established in August 1994 under the name "HDFC Bank Limited" and has its registered office in Mumbai, India. Retail banking, wholesale banking, and treasury operations are just a few of the financial and banking services it offers.

Outlook of HDFC Bank stock price

HDFC Bank is a large market cap banking company with over Rs. 838365 Crores of market capitalisation. The current market price of the stock is Rs.1,506. The stock's all-time high price is Rs.1,725, and the all-time low is Rs. 1, 272. The stock has a Return On Equity of 16.8% and a Return On Capital Employed of 6.77% over 5 years.

Buy Call Of Prabhudas Lilladher On HDFC Bank

According to the latest report of Gaurav Jani, research analyst of Prabhudas Lilladher 'Our update released on 6th July'22 (link) had covered merger related aspects like liabilities' glide path, asset mix, regulatory requirements and profitability. Discussions with investors on this merger update brought to light certain queries, following which we met HDFCB management to allay these concerns viz. 1) garnering higher market share in system deposits, 2) grandfathering of HDFC's bank borrowings, 3) share of unsecured loans in the merged entity, 4) drag on NIM due to PSL shortfall and 5) outlook on NIM/opex. We believe that faster deposit accretion for HDFC Bank from a system standpoint may be achievable, while grandfathering of bank borrowings may be permitted. Unsecured share in the merged entity might remain between 11-12%, as mortgage portfolio (higher ticket size) would grow aggressively. Standalone NIM may gradually improve (4.2% in FY22), as share of retail would rise that may also protect NIM owing to lower PSL requirements. Opex could remain elevated over the medium term. As we slightly raise NII for FY24E/25E, our PAT increases by average 2.5%. Hence we raise SOTP based TP from Rs1740 to Rs1800 basis Sep'24 core ABV but maintain 'BUY'.

Highlights On Buy Call Of Prabhudas Lilladher

Here are the quick pointers of latest report of Prabhudas Lilladher after the management meetup with HDFC Bank. The report says,
• '25% market share in incremental system deposits might be achieved.
• In our view grandfathering of bank borrowings could be allowed.
• Share of unsecured loans post-merger may be maintained at 11-12%.'