Motilal Oswal bullish on HDFC Bank shares, pegs Rs 2000 target on the back of multiple triggers

Domestic brokerage firm Motilal Oswal has maintained a Buy rating on India’s largest private lender HDFC Bank shares, with a target price of Rs 2000 per share amid multiple triggers, including the merger with promoter HDFC Limited and robust business growth in the fourth quarter of FY22. 

HDFC Bank has approved the merger with its promoter HDFC Limited, which was announced through an exchange filing on Monday. Post-merger, HDFC Limited will hold a 41 per cent stake in the bank.  

See Zee Business Live TV Streaming Below:

The amalgamation between HDFC Limited and HDFC Bank shall enable the latter to build its housing loan portfolio and enhance its existing customer base, the filing said. 

Besides, the lender has also reported robust loan growth in the March-end quarter of FY22, led by a healthy revival in Retail loans. The commercial banking and corporate segment too saw strong traction, which will likely support growth in PPOP, the brokerage said. 

Motilal Oswal expects the margin trajectory to recover gradually over FY23, while the uptick in Retail loan growth and unsecured products will be supportive of fee income. While the trend in Retail deposits too remains healthy, with the bank witnessing a sequential improvement in its CASA ratio to 48 per cent, the brokerage added. 

Trading near its 52-week high levels, the shares of HDFC Bank jumped over 14 per cent intraday to Rs 1721.85 per share on the BSE intraday trade on Monday. The stock at around 2 PM was trading around 9 per cent higher to Rs 1639 per share as against a nearly 2 per cent rise in the BSE Sensex. 

In its Q4 update, the bank’s deposit base rose 16.8 per cent year-on-year (YoY) and 7.8 per cent quarter-on-quarter to Rs 15.6 trillion. CASA deposits/TD grew 22/12.3 per cent YoY and over 10.2/5.7 per cent QoQ. CASA mix increased 90 basis points QoQ to 48 per cent. 

The bank purchased loans aggregating Rs 81.2 billion in Q4FY22, through the direct assignment route, under a home loan arrangement with HDFC and added 563 branches in Q4FY22, taking its total branch count to 6,342 as of March 2022.