HDFC Bank offers potential upside of nearly 40% as close above resistance to mark a major bullish event: CLSA analyst

HDFC Bank shares over the past one month have climbed over 11 per cent , nonetheless CLSA analyst Laurence Balanco is closely tracking the stock as it appears to be on the verge of a break-out.

Shares of the country’s leading lender last traded with a cut of over 0.7 per cent at Rs 1,689 apiece on the NSE even as the Nifty Private Index was up marginally by 0.1 per cent.

The analyst is of the view that the leading private sector lender’s stock has been trading in a range since 2021 beginning of 2021. This range is defined by resistance levels at Rs 1,717-Rs 1,734 and support levels at Rs 1,240-Rs 1,245. Close above the resistance, would mark a major bullish event, ending a period of over two years of ranging price action, he added.

This breakout would suggest an upside target of Rs 2,373, representing a potential increase of 40 per cent.

Earlier this week, Bernstein maintained its ‘outperform’ rating on the counter with a target price of Rs 2100. The global brokerage said that the lender is well positioned to regain its industry leading profitability over the next four years. Also, its return on assets or RoA is set to enhance from 1.8 per cent currently to 2.1 per cent. Loan yield at the company is also seen to improve by around 40-50 bps, while cost of funds which reduce by 18 bps, it added.

Of the 41 analysts tracking the stock, 31 analysts have recommended a ‘strong buy’ on the counter, Trendlyne data shows.