Broker's call: HDFC Bank (Buy)

| Updated on July 07, 2021

Axis Securities

HDFC Bank (Buy)

Target: ₹1,785

CMP: ₹1539.15

In its business update for Q1-FY22, HDFC Bank reported a steady loan book growth of 14.4 per cent/1.3 per cent y-o-y/q-o-q, led by non-retail loans (up 17 per cent/2.1 per cent y-o-y/q-o-q).

Retail book growth lagged, down one per cent q-o-q and up 9 per cent y-o-y on account of Covid-19 disruptions and suspension on new credit card issuances. Within non-retail loans, commercial and rural loans were up 25 per cent/4 per cent y-o-y/q-o-q while wholesale loans were up 10.5 per cent/1.5 per cent y-o-y/q-o-q. Total deposits grew 13per cent/0.8 per cent y-o-y/q-o-q, led by CASA deposits growth of 28 per cent y-o-y. In Q1-FY20, deposits were up 25 per cent/4 per cent y-o-y/q-o-q with retail deposits grew 16.5 per cent/3.5 per cent y-o-y/q-o-q.

The bank has managed to sustain its performance amidst Covid-19 uncertainties, both on the growth front as well as on the asset quality front. However, moderation is visible in the retail book, now forming 45 per cent of the total loan book, down from 47 per cent a year ago. Lifting ban on new credit cards will be a key monitorable.

We believe HDFC Bank remains one of the resilient stocks in the sector. We currently have a Buy on the stock with a target price of ₹1,785/share (SOTP basis core book at 3.6x FY23 and ₹40 subsidiary value).

Published on July 08, 2021

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