HDFC Bank's Share Price Down 17% This Year: Why Analysts See 44% Upside

Shares of HDFC Bank were gaining on Tuesday after the stock received upbeat recommendations from global analysts.

What Happened: Global brokerage firm Citi has issued a “buy” call on HDFC Bank, setting a target price of ₹2,050 per share, suggesting a potential upside of more than 44% from the previous close of ₹1,417.

Citi analysts are optimistic about the bank’s strong and sustainable business model, anticipating significant growth prospects in the coming years.

According to analysts at Citi, HDFC Bank is focused on maintaining a healthy liquidity deposit ratio (LDR) and liquidity coverage ratio (LCR). The bank plans to adjust lending rates to offset rising funding costs and aims to sustain its net interest margin (NIM) and return on assets (RoA) within targeted levels.

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Bernstein was also positive on the stock, maintaining its operational profit estimates and price target at ₹2,100, saying the long-term thesis for the bank was solid. The brokerage has an “outperform” rating on the stock.

It expects loan growth to be slightly lower but sees a sharp improvement in deposit accretion in the next few quarters. It also estimates that the replacement of high-cost liabilities will boost profitability and margins.

In a similar vein, analysts at Morgan Stanley have also expressed confidence in HDFC Bank, assigning an ‘overweight’ rating with a target price of ₹2,110 per share. This positive outlook follows the bank’s announcement of stable double-digit year-on-year (YoY) growth in its home loan business post-merger until December 31, 2023.

Price Action: Despite a 17% decline in the stock price of India’s largest private sector lender since the beginning of the year, compared with a 0.6% increase in the benchmark Sensex, Citi remains bullish on HDFC Bank’s future performance.

HDFC Bank’s share price was up 1.6% at ₹1,439.65 in morning trade on Tuesday.

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