Prabhudas Lilladher is bullish on HDFC Bank has recommended buy rating on the stock with a target price of Rs 1265 in its research report dated July 19, 2020.
Prabhudas Lilladher's research report on HDFC Bank
HDFCB reported a strong PAT of Rs66.6bn (PLe: Rs64.2bn) amidst COVID-19 lockdown uncertainty, which also prompted it to make additional Rs10bn as provisions leading to a Rs55.0bn of contingency+floating provisions cover. Operating performance was better with PPOP growth of 15% YoY despite losing momentum on core fee income streams to the tune of Rs20bn which was offset by 24% QoQ lower other opex. Bank will continue to build in higher provisioning ahead but prudent risk management gives us comfort on asset quality impact but we have yet to watch outcomes in 2HFY21 as moratorium is likely to end by Aug’20. Strong capital levels (CET1 at 16.7%), strong liabilities flow, agility in managing loan growth and strong provisioning cushion remain the key driving factors for our positive stance.
Outlook
We retain BUY with revised TP of Rs1,265 (from Rs1,105) based on 3.1x (from 2.9x) Mar-22 ABV on slightly tweaking loan growth & credit cost parameters.
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