HDFC Bank — Building A Future Ready Bank; Maintain Buy: Motilal Oswal

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We attended HDFCB's analyst day, where the management highlighted how the bank is getting future ready, with a focus on strengthening its digital capabilities and sustainable profitable growth.

The bank is planning various new initiatives, with equal emphasis on providing a superior experience to its customers. Growth is likely to be broad based, with a target to double its Balance Sheet over the next four-to-five years even on a merged basis.

It explained its rationale for the merger and addressed key investor concerns. We expect 18%/20% loans/PAT CAGR over FY22-24E, with RoA/RoE at 2.1%/17.8% in FY24.

HDFCB remains one of our preferred picks. We expect the stock to recover gradually as revenue and margin revive over FY23, while further clarity emerges on several aspects related to its merger with HDFC. We maintain our Buy rating with a TP of INR1,850/share.

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