HDFC Bank share price: UBS Securities sees sustainable business growth against peers in FY24; can yield 18% return

HDFC Bank Share Price NSE: Global brokerage UBS Securities is bullish on India’s largest private lender HDFC Bank. It has maintained a Buy rating on the stock with revised target price of Rs 1900 apiece from Rs 1750 per share earlier, implying an upside potential of more than 18 per cent from the current price.

Shares of HDFC Bank traded flat on Tuesday, December 6, around Rs 1600-1610 levels amid a bearish note in the domestic equity markets. At around 01:40 PM, the stock was down 0.2 per cent to Rs 1609.25 per share on the BSE as compared to a 0.4 per cent fall in the S&P BSE Sensex.

According to UBS, the private lender’s merger-related concerns reduced in the last six months, and hence it raises FY23E/FY24E EPS by 1/4 per cent, respectively. Several agencies and authorities have already approved the merger between HDFC and HDFC Bank, which was announced earlier this year in April. 

Also Read: HDFC Bank vs ICICI Bank: How India's top two private lenders compare after September quarterly results?

HDFC Bank expects to amalgamate its home loan major parent HDFC into itself by September next year, a top official said earlier in November 2022, as per PTI report.

Both HDFC and HDFC Bank held general meetings to seek shareholder approvals for what is billed as the largest merger in Indian corporate history at over USD 40 billion.

Other factors that make the global brokerage bullish on the stock – operating metrics seem more sustainable in FY24 against the peers such as ICICI Bank. Besides, the bank is likely to have more sustainable NIM (net interest margin) compared to peers in FY24, UBS also noted.

Also Read: NSE may exclude HDFC from Nifty index before its merger with HDFC Bank

The brokerage further believes that FY23 credit cost is closest to its normalised credit cost and it provides a cushion to FY24-25 earnings of HDFC Bank.

The stock price of HDFC Bank has reported over 16 per cent growth in the last six months as compared to a more than 12 per cent rise in the BSE Sensex. The counter in the last one year has underperformed the market as it gained by 7 per cent versus 10 per cent jump in Sensex.