HDFC Bank’s shares rose by 0.47% to Rs 1,437 per share on March 4, 2024, thanks to a positive outlook from HSBC. HSBC maintained a ‘buy’ recommendation for the stock, setting a target price of Rs 1,750, indicating a potential 22% increase.
The main reason behind this optimism is the expected growth in loans rather than deposits. This shift in focus could be good for HDFC Bank, as it may positively impact the Net Interest Margin (NIM) and Return on Assets (RoA).
According to HSBC, HDFC Bank’s stock has the potential to provide returns of 15–29% Compound Annual Growth Rate (CAGR) from FY24 to FY27. However, it’s essential to note that the stock has faced challenges, with a significant 16% drop since its reverse merger with parent company HDFC on July 1, 2023. After the release of the Q3 results on January 16, 2024, concerns have continued to weigh on the stock.
Earlier, on January 17, KR Choksey recommended buying HDFC Bank shares with a target of Rs 2,000. Despite concerns about the falling Loan-to-Deposit Ratio (LDR), KR Choksey emphasized the bank’s strategies to control deposit costs and enhance the share of Current Account Savings Account (CASA) and higher-yielding retail. The brokerage revised the target price slightly to Rs 2,000 from Rs 2,025, maintaining a positive outlook on the stock.