HDFC Bank Ltd. is well-positioned to weather the challenges of capital adequacy and bad loans, according to most brokerages.
The country's largest private sector lender reported a 20 percent jump in net profit for the fourth quarter as asset quality remained stable. Its loan book growth slipped to a four-quarter low of 18.7 percent, dragged by sluggish growth in the corporate lending portfolio.
Here's what brokerages had to say about HDFC Bank's Q4 performance
CLSA
- Maintain 'Buy' and raised price target to Rs 2,470 from Rs 2,340
- Opportunity lies in market share gains in financing of infrastructure and NCLT loans and government relationships
- Will watch for any structural impact of slow branch growth on retail business growth, higher growth in unsecured loans.
- Expect 21 percent compounded annual growth in earnings over FY18-21.
Motilal Oswal
- Maintain Buy with a target price of Rs 2,400
- Upcoming capital raising will enable it to sustain growth momentum.
- Strong fundamentals and near-nil stress loans would enable the bank to gain market share.
- Return on equity is expected to be the best among private banks at around 17 percent.
Prabhudas Lilladher
- Maintain Buy and price target hiked to Rs 2,251 from Rs 2,136
- Expect earnings CAGR of 20‐21 percent with strong return ratios.
- Remains one of the top picks in a challenging environment.
Credit Suisse
- Maintain Outperform with a target price Rs 2,230.
- Another strong quarter; deposit growth outpaces loan growth
- Cut EPS estimate by 6 percent on factoring in dilution from planned capital raise.
Kotak
- Maintains Reduce rating with price target unchanged
- Not taking positive view on shares due to expensive valuations
BoB Capital Markets
- Maintains Buy with a price target of Rs 2,250.
- Expect HDFC Bank to be the best placed among peers in managing near-term challenges of capital adequacy.
Shares of the lender declined 0.7 percent to Rs 1942 apiece, snapping a two-day winning streak. The stock saw an intraday high of Rs 1,984 and a low of Rs 1,860 on the BSE Ltd.
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