HDFC Bank declines as CLSA downgrades stock to ‘outperform’; check new target price

HDFC Bank share price, HDFC Bank share price target: HDFC Bank shares have been underperforming since their Q3 results and have shed as much as 14 per cent since the release of December quarter numbers on January 16, 2024. Moreover, the bank is also on analysts’ radar and has been constantly witnessing upgrades and downgrades.

After LKP Securities recommended a strong buy on the counter last week with a 1-year target of Rs 1,762, CLSA has downgraded the stock with an ‘outperform’ view as against the earlier ‘buy’ call. The new target is pegged at Rs 1,650 per share, as against Rs 2,025 earlier.

The foreign brokerage maintains that the challenge of deposit accretion manifests in lower loan growth. While the merger with HDFC does provide long-term benefits, the medium-term poses more challenges than upsides, it added.

CLSA has cut its deposit accretion for the private lender for FY25CL from Rs 5.2 trillion to Rs 4.2 trillion and loan growth from 15 per cent to 10 per cent. Also, the brokerage added that the net interest margin will show up more or a ‘U-shaped’ recovery than a ‘V-shaped’. A U-shaped recovery is a fall followed by a gradual rise back to its previous high.The brokerage has slashed its FY25/26 EPS estimates by 5 per cent.

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