Prabhudas Lilladher’s research report on HDFC Bank
We remain constructive on HDFCB as merging of two systemically important financial institutions would boost balance sheet size, access to a larger client base and cross sell opportunities. Our interaction with the management of HDFC Bank and HDFC Ltd reinforced our confidence in the ability of the merged entity to garner deposits, meet regulatory requirements and improve profitability. While we don’t foresee any shortfall on CRR/SLR, a deficit of 50% is projected on PSL needs, although it could be lower.
Outlook
NIM may initially dip post-merger but improve thereafter and core RoE might enhance over FY23E-25E from 15.1% to 16.8%. Due to lower NII and higher opex we trim our PAT for HDFCB in FY23E/24E by average ~6.4% and lower multiple to 3.0x from 3.2x. With combined core market cap at Rs9trn, valuation is attractive at 2.3x core FY24 ABV. We roll forward to Sep’24 core ABV and our TP is unchanged with SOTP based TP of Rs1740. Maintain BUY.
More Info
At 16:01 hrs HDFC Bank was quoting at Rs 1,396.05, up Rs 24.55, or 1.79 percent.
It has touched an intraday high of Rs 1,398.00 and an intraday low of Rs 1,374.40.
It was trading with volumes of 512,632 shares, compared to its thirty day average of 271,219 shares, an increase of 89.01 percent.
In the previous trading session, the share closed up 1.44 percent or Rs 19.50 at Rs 1,371.50.
The share touched its 52-week high Rs 1,724.30 and 52-week low Rs 1,271.75 on 18 October, 2021 and 17 June, 2022, respectively.
Currently, it is trading 19.04 percent below its 52-week high and 9.77 percent above its 52-week low.
Market capitalisation stands at Rs 775,443.34 crore.
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