HDFC Bank Q3 Results Review — Inline With Contained Credit Costs; Dolat Capital Maintains 'Accumulate'

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Dolat Capital Report

HDFC Bank Ltd. reported in-line profitability metrics with sequentially stable net interest margin at 3.43% (-3 bps QoQ), reported RoA at 1.9%, and contained opex. Credit costs at 50 bps and slippages at 1.4% were in-line and continue to hold better relative to peers. Though low credit cost was aided by decline in provision coverage ratio (-200 bps QoQ), PCR was stable ex of agri portfolio.

Management remains confident on the strength of asset quality metrics. Lack of net interest margin improvement is led by lower risk weighted intensity and intentional moderation in retail growth. Loan growth is guided to be closer to the system in FY26E and higher versus system in FY27E.

We tweak earnings, factoring in lower growth and slightly improved opex. Maintain ‘Accumulate’ rating with unrevised target price of Rs 1950, valuing standalone bank at 2.3 times Sep-26E price-to-book-value and adding subsidiary value.

There is a positive bias on valuations from steady asset quality metrics, but we look for improvement in business growth as a key trigger.

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