Axis Securities is Equal Weight on HDFC Bank, target price Rs 2025

Axis Securities has an equal weight call on HDFC Bank with a target price of Rs 2,025. The current market price of HDFC Bank is Rs 1,760.5. HDFC Bank, incorporated in 1994, has a market cap of Rs 1341121.76 crore.

HDFC Bank's key products/revenue segments include Interest & Discount on Advances & Bills, Income From Investment, Interest and Interest On Balances with RBI and Other Inter-Bank Funds for the year ending 31-Mar-2024.

Financials

For the quarter ended 30-09-2024, the company has reported a Consolidated Total Income of Rs 121456.74 crore, up 3.81 % from last quarter Total Income of Rs 116996.49 crore and up 12.91 % from last year same quarter Total Income of Rs 107566.62 crore. The bank has reported net profit after tax of Rs 17825.91 crore in latest quarter.

Investment Rationale
Axis Securities says the HDFC Bank management has clearly highlighted its focus on reducing its LDR to pre-merger levels adopting an accelerated approach, resulting in a significantly slower credit growth vs deposit growth. HDFC Bank does not intend to disturb the deposit growth momentum that has picked up in the current quarter. The brokerage expects HDFC Bank to deliver RoA/RoE of 1.8-1.9%/14-16% over FY25-27E, supported by gradually improving cost ratios and steady credit costs. The key risks are: a) Slowdown in overall credit momentum owing to the bank's inability to ensure deposit mobilization, b) Slower substitution of higher-cost debt with lower-cost deposits

Promoter/FII Holdings
Promoters held 25.52 per cent stake in the company as of 30-Jun-2024, while FIIs owned 47.17 per cent, DIIs 35.19 per cent.