Mumbai: Analysts at most leading brokerages cut their price targets on HDFC Bank after the lender posted weaker net interest margins (NIM) for the second quarter. The stock gained 0.84% to close at ₹1,542.5 on Tuesday. The average price target on HDFC Bank of all analysts compiled by Bloomberg is at ₹1,954, implying an upside of almost 27% over Tuesday’s closing.
Most analysts said HDFC Bank’s valuations were cheaper compared to historical averages but concerns over profitability and growth could delay re-rating.
“While we appreciate the strength of the franchise, its relatively lower medium-term RoA (Return on Asset) profile vs peers makes outperformance difficult,” said Nomura in a note to clients.
Morgan Stanley
Stock valuation of estimated Price to Book Value at 2.1 times appears attractive.
Key re-rating catalysts are strong deposit growth and margin improvement.
Kotak Institutional
Comfortable retaining positive thesis; worst of merger-related news over and growth may resume with fewer concerns.
Margins may have bottomed out; margin progression key focus area in the medium term.
HSBC
Bank facing tough deliverables, with few low hanging fruit to pluck.
Could trade at lower valuations than ICICI due to performance gap; risk reward ratio however favourable.
Jefferies
Estimated valuations of adjusted Price to Book at 2.2 times reasonable.
Bring the world’s 7th largest bank, it looks attractive for global portfolios as well.
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