Brokers' call on HDFC Bank, Infosys

Barclays Overweight on HDFC Bank

Barclays retained its ‘Overweight’ rating on HDFC Bank and raised its target price for the bank by 6% to Rs 690 on the bank’s encouraging earnings in the July-September quarter. Barclays analysts sounded positive on the bank’s expansion into “deeper geographies.”

“By shifting its mix towards fixed rate retail loans, the bank also appears to be positioning its balance sheet for a declining rate environment. CVs, gold loans, credit cards and the ‘other’ category (largely comprising lending against FDs) were key growth drivers,” the analysts said in a note.

They valued HDFC Bank at 22 times P/FE, in line with historical averages, and said it is a low-risk investment option in a tough environment.

A further upside in HDFC Bank’s shares would come from a “benign” asset quality cycle in the bank’s retail loans and a faster balance sheet growth, the analysts said, adding that such a scenario could lead earnings per share to rise by up to 10% and a stock price of Rs 760 per share.

Infosys Remains a Buy: Jefferies

Jefferies maintained a ‘Buy’ rating on Infosys after the software exporter reported earnings for the July-September quarter. Calling the results “lackluster”, Jefferies analysts said that the “disappointment” in the results was not to the extent of the previous quarters.

However, the market has “missed out” on a pick-up in volume growth and stabilising realisations, something the analysts term as “clear signs of turnaround.”

“Our analysis suggests that the company has margin levers and with growth coming back, Infosys would be better placed to protect margins,” the analysts said. They slightly reduced the target price to Rs 3,000 based on valuing the company at 16 times EPS expected for FY14.