Motilal Oswal: Buy | Target: Rs 1,950 | Upside: 22%
Kotak: Buy: Buy | Target: Rs 1,925 | Upside: Rs 1,925 | 20%
HDFC Bank remains one of the preferred picks of Motilal Oswal and the brokerage maintains a ‘Buy’ rating on the stock with a price target of Rs 1,950. A brokerage note highlighted that the bank is getting bigger, stronger and faster.
The merger process is on track and expected to be completed in about 5 weeks. Exciting growth opportunities will unfold for the bank as it is getting future-ready by focusing on strengthening its digital capabilities.Demand remains strong in the secured retail segment, and with 40-50 crore people yet to be tapped by the banking system, the growth story remains optimistic. Pricing discipline puts HDFC Bank ahead despite cut-throat competition.
While unsecured retail has also witnessed new players and aggression in the sector, a robust customer acquisition run rate of 1o lakh a month across a gamut of retail products support strong growth momentum, Motilal Oswal report said.
Kotaka maintains a ‘Buy’ with a Fair Value of Rs 1,925, valuing the bank at 2.7X book for RoEs at 16-17% levels. The Kotak report highlighted management’s confidence on an unlikely impact on return ratios post the merger.
Deposit mobilization remains one key area that is likely to be monitored closely, and we need more than a few quarters to establish a trend, Kotak said as a caveat.
HDFC Bank shares have given returns of 20% over a 1-year outperforming the Nifty50 (14%) while underperforming Nifty Bank (+26%) and BSE Bankex (+24%) according to Trendlyne data.
However, the stock has been highly volatile and traded with a 1-month beta of 2.07, the trendlyne data said. The price-to-book ratio stands at 3.1 which is high in comparison to its peers.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)