HDFC Bank shares trade flat even as analysts bet big on the index heavyweight

HDFC Bank share price: HDFC Bank shares continued their gains for the second straight session on Friday, February 16, and notched a high of Rs 1,424.95, up 0.8 per cent over the previous close, only to trade flat later.

After a steep decline of around 8 per cent since the lender’s Q3 result announcement, the bank's stock is now gaining ground. 

Global brokerages, despite the cautious results of the lender, have turned upbeat on the counter. Morgan Stanley has maintained its overweight stance on the counter, with a target of Rs 2,110, implying significant gains of over 49 per cent.

The leading private sector lender said on Thursday it was closing the gap with SBI on the home loan book front, which as of the December quarter stood at Rs 6.84 lakh crore. The home loan is a boon for the bank and even impacts CASA positively.

“HDFC Bank added 3.6 per cent sequentially to its home loan AUM to reach Rs 6.84 lakh crore. Annualised comparison is not possible as the merger with HDFC came into force in July 2023,” said the lender.

Arvind Kapil, head of home loans and mortgages at HDFC Bank, told the media that the bank added a little over 20 per cent of the incremental home loan sales in the December quarter and grew at the fastest pace among all other lenders.

Kapil added that since the merger, HDFC Bank has made some rapid strides in the turnaround time of loan processing. "We want to further reduce the timeline, if not our 10-second personal loan disbursal mode, to something much shorter," Kapil added.

The official further said that since the merger, as much as 80 per cent of the new home loan customers "opened savings accounts with us," compared to only around 35 per cent pre-merger.

Amid all these developments, foreign brokerage Bernstein has also maintained its positive stance on the stock, with a target of Rs 2,100. Going ahead, technicals also paint a positive picture for the stock, with bullish reversals in the offing.

“We are positive about HDFC Bank. Its valuation in terms of price to adjusted book value is very attractive. Also, locating over 53 per cent of total branches in rural and semi-urban areas is a big medium- to long-term trigger, as we believe future growth opportunities for banks lie in these areas,” said G. Chokkalingam, founder of Equinomics.

We believe that the recent correction in stock price is a good opportunity for investors," added the analyst.