HDFC Bank trades higher as HSBC maintains buy; check the target price

HDFC Bank share price: HDFC Bank shares in Monday’s trade (March 4, 2024) were seen gaining some ground. In the opening deals, shares traded 0.47 per cent higher to Rs 1,437 apiece on the BSE. 

The stock gained after HSBC maintained a 'buy' call on the stock with a target of Rs 1750, implying an up to 22 per cent upside.

The brokerage said that expectations of high loan growth, not deposits, are at the core of recent disappointments. Therefore, lowering loan growth may be beneficial for the company, as it would be positive for the NIM/RoA outlook.

The stock offers possible returns of 15–29% CAGR over FY24–27E, added the brokerage. 

Shares of the country’s leading lender, HDFC Bank, since its reverse merger with the parent company, HDFC, on July 1, 2023, have dropped a significant 16 per cent. And now, ever since its Q3 results were released on January 16, 2024, the lender’s shares have continued to languish on several of the concerns.

Earlier, KR Choksey, in its report dated January 17, gave a buy call on the counter with a target of Rs 2,000. While a falling loan-to-deposit ratio (LDR) could pressurise NIM, the bank would focus on (1) controlling deposit costs and (2) improving the share of CASA and higher-yielding retail at the brokerage. 

The brokerage further maintained the multiple at 2.7x and revised the TP to Rs 2,000 from Rs 2,025.