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LKP Securities
HDFC Bank (Buy)
Target: ₹2,104
CMP: ₹1,493.6
While the regulatory changes by RBI are aimed at mitigating systemic risks and facilitating innovation on the digital front, HDFC Bank aims to deliver industry-beating growth through market share gains. The focus on new-age technologies like IoT, cloud and artificial intelligence is to enhance credit risk assessment through an improvement in the underwriting process and accelerate customer acquisitions.
Its credit card share (23 per cent as at September 2021) is likely to improve post lifting of the ban on issue of new cards for almost 8 months. Our investment argument is based on improved growth prospects on opening up of the economy, digital adoption to enhance technological architecture and best-in-class return on assets.
The bank carries immense growth (secured and unsecured) prospects which will be driven by market share gain as well as partnership with fin-techs (BNPL loans), providing an effective platform to expand lending opportunities across diverse verticals.
Separately, the bank is aiming to grow the mortgage portfolio by leveraging its relationship with HDFC Ltd.
Moreover, it is working towards affordable housing via partnerships with HFCs other than HDFC Ltd.
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