Buy HDFC Bank; target of Rs 1800: Motilal Oswal

Motilal Oswal is bullish on HDFC Bank recommended buy rating on the stock with a target price of Rs 1800 in its research report dated April 18, 2021.

An Edelweiss research report for Q4FY21 says road tonnage continued to improve, evident in e-way bill generation (up 6% QoQ) and improved core trucking rentals. “We estimate tonnage would increase by three–five percent for truckers. Asset-light plays Mahindra Logistics and TCI Express remain our preferred picks due to their ability to scale up/down as the environment demands,” the report said. Edelweiss is bullish on Blue Dart Express due to the pandemic-induced boom in e-commerce and its leaner cost structure. It has retained a ‘buy’ call on Mahindra Logistics, TCI Express and Blue Dart Express.

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Motilal Oswal’s research report on HDFC Bank

HDFC Bank (HDFCB) reported a healthy quarter, with advances growth driven by both Corporate and continued revival in the Retail segment. Operating performance remained steady, led by robust business growth, stable margins, and controlled opex. However, the bank made additional provisions of INR13b, resulting in a PAT miss. Asset quality remained stable, while total restructuring stood at 0.6% of loans. The GNPA ratio improved 6bp QoQ to 1.32% (v/s a proforma GNPA ratio of 1.38%) and NNPA ratio was stable at 0.4%. PCR held steady at ~70%. We marginally cut our estimates for FY22/FY23 by 2%/4% and estimate an earnings CAGR of 20% over FY21–23E. Maintain Buy.

Outlook

We moderately cut our estimates for FY22/FY23E and expect a 20% PAT CAGR over FY21–FY23E. Maintain Buy, with TP of INR1,800 (3.5x FY23E ABV).

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