HDFC Bank Q2 Review: Motilal Oswal Maintains 'Buy' Post Steady Quarter —Check Target Price

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. 

Motilal Oswal Report

HDFC Bank Ltd. posted a steady quarter with an earnings beat, aided by healthy net interest income and robust treasury gains. Net interest margins moderated 8bp QoQ and are expected to pick up going forward.

Loan growth has started gaining traction, which led the credit-deposit ratio to increase to 98%; however, management expects this to reduce below 90% in the medium term.

Slippages moderated, while recoveries were healthy, enabling a decline in core credit cost.

HDFC Bank made additional contingency provisions of Rs 15 billion and maintained its floating provisions of Rs 214 billion, taking the total such provisions to Rs 381 billion (1.4% of loans).

The gradual retirement of high-cost borrowings, along with an improvement in operating leverage and the provision buffer, will support return ratios over the coming years.

We fine-tune our earnings estimates for FY27 and estimate HDFC Bank to deliver FY27E RoA/RoE of 1.84%/14.3%. Reiterate Buy with a target price of Rs 1,175 (2.7x FY27E ABV + Rs 137 for subs).

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.