HDFC Bank's Risk-Reward Favorable, But HSBC Cuts Target After Q3

Photo : Bloomberg

HSBC has cut its Earnings Per Share (EPS) forecast for HDFC Bank to financial years 2026-2027 by 4% to 5%. The cut is due to concerns over a slowdown in the loan growth and pressure on Net Interest Margins. However, the overall rating was held at "buy," but the price target for HDFC Bank fell to ₹1,980 from ₹2,130 earlier.

After HDFC Bank announced its December quarter results on January 22, analysts continue to be largely positive. Among 48 analysts covering HDFC Bank, no one has "sell" recommendation. Of the 48 analysts, 41 have maintained the "buy" rating, and the remaining analysts are on a "hold."

HDFC Bank's net profit and NII for the quarter were in line with expectations, but asset quality has slipped a bit compared to the previous quarter. The bank has also seen an increase in slippages, which rose by ₹1,000 crore from the September quarter.

Sashidhar Jagdishan, the bank's Managing Director and CEO, during a post-earnings call said that the overall economic environment remains tough. Tight liquidity conditions, slowing urban demand, and weak private sector investments are some of the challenges. However, he mentioned that there are signs of improvement in rural demand, supported by higher government spending.

UBS has maintained its "buy" rating on HDFC Bank with a price target of ₹2,100. It feels that its risk-reward ratio is quite favorable at 1.9 times the price-to-book value for FY 2026. This is seen as a 15% discount compared to the valuations of ICICI Bank.

While Macquarie and Bernstein also have an "outperform" rating on the stock, Macquarie has a price target of ₹2,300, the highest among analysts and expects HDFC Bank's NIMs to improve once the macroeconomic environment improves with better liquidity and reduction in interest rates.

Bernstein is also positive and maintains its price target at ₹2,300. The firm described HDFC Bank's results as "good," with healthy asset quality and solid growth in NII. It noted that a 12% growth in profit before tax (PBT) supports confidence in HDFC Bank's return to mid-teens EPS growth in the near future.

Meanwhile, CLSA has a "hold" rating with a price target of ₹1,875. It believes the loan growth for the bank would pick up gradually and expects LDR to hit 90% only by financial year 2027.

The stock price of HDFC Bank rebounded after the results. Closing 1.8% higher, it also was instrumental in helping the Nifty 50 index. U.S.-listed ADRs of HDFC Bank went up by 3% after the announcement.

#trending #latest #HDFCBank #HSBC #StockMarket #EarningsReport #BankingSector #NetInterestMargin #LoanGrowth #Investing #FinancialAnalysis #Macquarie #Bernstein #UBS #StockRatings #IndianStocks #Nifty50 #EPS #IndianBanking #breakingnews #trendingnews #DXBIndiaNews #BreakingNewsIndia #IndiaUpdates #GlobalIndiaNews #TrendingInIndia #DXBTrending #IndiaHeadlines #TopStoriesIndia #MiddleEastMeetsIndia #ViralIndiaNews #SouthAsiaNews #AllIndianews #breakingsportsnews #breakingPoliticalnews #breakingFinancenews #breakingregionalnews #Entertainmentnews #Educationnews #technologynews #DXBIndia

Simple yoga poses to help reduce PCOD symptoms and balance hormones... Read More.

RPSC has released the RAS Preliminary Exam 2024 admit cards today, January 30, 2025.... Read More.