HDFC Bank shares were in focus after the lender's earnings for the July-September period exceeded Street expectations.
HDFC Bank shares hit a 52-week high on Monday after the country's largest lender by market value beat Street expectations with its quarterly financial results. At 9:30 am, HDFC Bank shares traded 0.4 percent higher at Rs 1,693.9 apiece on BSE, having risen as much as 2.2 percent to a 52-week high of Rs 1,725 earlier in the day.
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On Saturday, HDFC Bank reported a 17.6 percent jump in net profit to Rs 8,834.3 crore for the quarter ended September 30. Analysts in a CNBC-TV18 poll had predicted a net profit of Rs 8,796.8 crore.
Here's what brokerages have to say on HDFC Bank post-Q2 results:
HDFC Bank's asset quality has improved with an encouraging pickup in retail loan growth, according to the brokerage. The increase in the cost-income ratio from 35 percent to 37 percent sequentially is in line with expectations, said Macquarie, which has maintained an 'outperform' rating on HDFC Bank with a target price of Rs 2,005.
The brokerage said HDFC Bank’s commentary indicates retail/commercial growth will continue to accelerate. CLSA expects an earnings CAGR of 18 percent over FY21-24, and has maintained a 'buy' call on the stock with a target price of Rs 2,025. The lender's growth improved especially in the net interest margin-accretive segments, and its additional restructuring of 1.2 percent is bigger than expectation.
The brokerage has retained a 'buy' rating on the stock with a target price of Rs 1,955. The lender's retail-to-wholesale loan mix is likely to swing back, according to Nomura. The management has indicated that retail loan conditions have improved and the bank is willing to change market share.
The lender saw a strong pickup in growth in the retail and SME loan segments in the July-September period, the brokerage said. It is one of the fastest-growing lenders in the country and has strong capital levels, said Credit Suisse, which has maintained an 'outperform' rating on the stock with a target price of Rs 1,950.
HDFC Bank continues to deliver strong business growth compared with its peers, resulting in higher market share, according to the brokerage. This is led by a healthy pickup in the retail segment while commercial and rural banking continues to remain robust, it said. The lender's earnings were in line with the estimate despite additional contingent provisions to strengthen its balance sheet, according to Motilal Oswal, which has a 'buy' rating on HDFC Bank with a revised target price of Rs 2,000. Its asset quality ratios have improved but high provision coverage and a contingent provisions buffer provide comfort on the asset quality front, it said. The brokerage's estimates remain unchanged at 20 percent PAT CAGR over FY21-24E, with RoA of 2.1 and RoE of 18.3 percent in FY24E.
(Edited by : Ajay Vaishnav)