HDFC Bank Maintains Buy Rating, Sets Price Target at Rs 1002: LKP Research
HDFC Bank Posts Strong Quarterly Performance Amidst Geopolitical Uncertainty
HDFC Bank reported a solid quarterly performance, driven by healthy growth in advances across retail, SME, and corporate segments. While margins remained steady, the bank's bottom-line improved on a sharper decline in provision expenses, which fell by 18.3% year-over-year (YoY). Additionally, the bank achieved multi-year best asset quality in the midst of geopolitical issues and shall continue to monitor sectoral impacts regularly to ensure growth remains profitable and sustainable.
The bank's deposit growth of 14.4% YoY outpaced credit growth, leading to a reduction in Loan to Deposit Ratio (LDR) concerns. This trend suggests that HDFC Bank is well-positioned to navigate the current economic landscape.
| Segment | QoQ Growth (YoY) | FY28E Target |
|---|---|---|
| Retail Advances | 10.6% | 15.6% |
| SME Advances | 14.8% | 18.4% |
| Corporate Advances | 12.4% | 17.2% |
Read also: Elitecon International Share Price Surges 5% Amid Broader Market Decline
The bank's sustained franchise strength and normalizing credit costs are expected to support its ability to deliver a return on assets (RoA) and return on equity (RoE) of 2.1% and 15.6%, respectively, by FY28E. As a result, LKP Research upgrades its rating to BUY, with a Sum-of-the-Parts (SOTP)-based target price of ₹1,002, given attractive valuations.
Investor Takeaway
Investors should consider buying HDFC Bank due to its solid quarterly performance and attractive valuations.
More in Market
Elitecon International Share Price Surges 5% Amid Broader Market Decline
Havells India Shares Decline 6% Following Disappointing Q4 Earnings, Brokerages Adjust Target Prices
Nestle Reports Strongest Quarterly Growth in a Decade, Boosts Long-Term Earnings Prospects
