HDFC Bank, one of India’s leading private sector banks, recently received positive reviews from various financial institutions following its Q4 results. Jefferies upgraded its rating on the bank to Buy and raised the target price to Rs 1880. Despite the Q4 profit of Rs 165 billion falling below estimates, the bank’s pre-provision operating profit (PPOP) was in line with expectations. Adjusted for one-offs, the earnings per share (EPS) stood at Rs 21 and the return on assets (ROA) at 1.9%.
Key highlights of the review included a slight rise in Net Interest Margins (NIMs) and strong deposit growth of 17% (adjusted for merger). However, loan growth lagged behind at 12%. Meanwhile, Morgan Stanley also maintained an Overweight rating on the bank with a target price of Rs 1900. They highlighted a strong bounce-back in Liquidity Coverage Ratio (LCR) and improved margins in the last quarter.
On the other hand, Motilal Oswal Securities reiterated a Buy rating on HDFC Bank with a target price of Rs 1950. They praised the bank’s core performance and improvement in margins quarter-on-quarter. The bank was commended for prudently deploying one-off gains to boost floating provisions and enhance liquidity coverage ratio.
ICICI Securities upgraded their rating on HDFC Bank to BUY from ADD, with a target price of Rs 1850. They noted strong reported and adjusted return on assets and estimated a gradual re-rating based on sustained deposit growth. The bank’s reduction in borrowings and improvement in Net Interest Margin were also highlighted.
Overall, analysts are optimistic about HDFC Bank’s future performance, with expectations of healthy return on assets and sustained growth in loans and deposits over the next few years. Despite some challenges faced in the last quarter, the bank’s strategic initiatives and financial prudence have been well-received by the market.
