ICICI Securities is bullish on HDFC recommended buy rating on the stock with a target price of Rs 2423 in its research report dated September 07, 2020.
ICICI Securities research report on HDFC
HDFC has strengthened its balance sheet further with recent capital raise (shoring up tier-1 to 19.5%) over and above provisioning buffer of 2.64% of AUM and excess liquidity (at >5% of balance sheet). While movement from Morat 1.0 to Morat 2.0 has not been overwhelming (higher print at 16.6% for retail and 39% for non-retail) due to request-based disclosure approach (not collection efficiency), flow into restructuring will still be restricted. Similar to actions in Q4FY20, HDFC might proactively prefer recognising non-Covid stress upfront (rather than restructuring). Disbursement trends MoM (>80% in July) suggest normalisation in a couple of months and start of growth phase post Q3FY21. Factoring-in the recent capital raise, we revise our EPS and BV upwards by 10%/1% and 12.7%/13.4% respectively for FY21E/FY22E.
Outlook
We maintain our stance of excess buffers (credit cost, liquidity, capital) and superior profile to support earnings traction and help consolidate HDFC’s positioning amidst adversity. Maintain BUY with a revised SoTP-based target price of Rs2,423 (earlier: Rs2,345).
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Read More