Reputed brokerage firm Motilal Oswal recommended investors buying the stocks of HDFC Bank for a 51% return. The firm mentioned, "HDFC Bank has exhibited a healthy revival in retail loan growth propelled by a pick-up in unsecured segments while the commercial banking segment has also witnessed strong traction."
The Current Market Price (CMP) of HDFC Bank is Rs. 1327. Motilal Oswal has estimated a Target Price for the stock at Rs. 2000. The stock is expected to offer a 51% upside, in 1 year.
|Current Market Price (CMP)||Rs. 1327|
|Target Price||Rs. 2000|
|1 year return||51.00%|
HDFC Bank continues to maintain a leading market share across multiple digital channels with an 18% share in POS terminals and ~9%/~27% share in debit/credit card spends as of 9MFY22. It has a credit card base of 15.8m (23% share) over a similar period. About 96% of transactions are carried out digitally, resulting in continuous improvements in cost ratios and productivity. With a revival in retail loan growth along with improving product mix and continued strength in liability franchise (CASA ratio has improved 410bp YoY to 47.1% in 3QFY22). The bank has witnessed a healthy pick-up in retail loans recently, which grew at an average of 5% QoQ over the past two quarters.
Comments by Motilal Oswal
On the stock, Motilal Oswal commented, "The stock has undergone a significant correction and is trading at ~2SD below its 10-year average valuations, while the growth and earnings outlook remains robust. HDFC Bank continues to be our high conviction BUY in the banking space. We expect the bank to deliver healthy business growth fueled by a pick-up in retail (unsecured products) business and continued strength in the commercial banking business. We estimate HDFC Bank to report ~18% PAT CAGR over FY22-24."
About the company
HDFC Bank has a banking network of 5,779 branches and 17,238 ATM's in 2,956 cities/towns. HDFC Bank has created a new business segment of Commercial and Rural Banking to capture the next wave of growth and indicated that it is the largest bank in the MSME segment. The segment is witnessing robust traction and grew at >25% YoY over the past few quarters. In 3QFY22, commercial and rural loans grew 30% YoY while growth in low-yielding corporate book moderated to 7% YoY.
The above stock was picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.