HDFC Bank’s Q2 results have prompted a range of responses from brokerages, reflecting different outlooks based on the bank’s performance and future prospects. While some brokerages are optimistic, others have taken a more cautious stance due to concerns over growth and profitability. Here’s a look at what the major financial analysts are saying about HDFC Bank:
Bernstein: Outperform, Target Price Rs 2100
Bernstein has maintained its Outperform rating on HDFC Bank with a target price of Rs 2100. The brokerage highlighted that the bank’s Q2 results resembled its pre-2020 performance, delivering almost no surprises and appearing immune to challenges such as NIM declines and rising credit costs, which have affected its peers. Although HDFC Bank still has gaps to bridge in terms of Return on Assets (RoA) and growth, Bernstein sees the bank making steady progress. Key positives included stable NIM, growth in Current Account Savings Account (CASA), stable credit costs, and moderate operating expense growth. However, the brokerage flagged slow loan growth as a known negative.
Goldman Sachs: Buy, Target Price Rs 2156
Goldman Sachs remains bullish on HDFC Bank, maintaining a Buy rating and setting a target price of Rs 2156. The bank posted in-line core operating profits and a slight beat on PAT for Q2. The Pre-Provision Operating Profit (PPOP) RoA improved to 2.7%, and the bank’s PAT exceeded estimates by 10%, thanks to lower-than-expected provisions. The brokerage sees strong earnings visibility and expects further consolidation of the loan-deposit ratio. With the first quarter after the merger with eHDFC Ltd showing an RoA expansion to 1.9%, Goldman Sachs believes the bank is well-positioned for continued growth.
JPMorgan: Neutral, Target Price Rs 1750
JPMorgan, however, is more cautious, maintaining a Neutral rating with a reduced target price of Rs 1750. HDFC Bank’s Q2 PAT stood at Rs 168 billion, up 5% year-on-year and 3% ahead of JPMorgan’s estimates, supported by a reversal of Alternative Investment Fund (AIF) related provisions. While core net income was in line, NIM remained flat quarter-on-quarter due to a balanced loan and liability mix. Asset quality was stable with net slippages contained at 0.7%, but the brokerage flagged concerns about the bank’s moderate loan growth amid a cautious stance on new regulations.
The current market price (CMP) of HDFC Bank is Rs 1,684.80.
Disclaimer: This article is for informational purposes only and should not be construed as financial advice. Please consult a financial advisor before making any investment decisions.
