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Investing.com - Axis Capital (NYSE:AXS) raised its price target on HDFC Bank Ltd (NSE:HDBK) (HDFCB:IN) (NYSE:HDB) to INR2,300.00 from INR2,205.00 on Thursday, while maintaining a Buy rating on the stock.
The research firm expects HDFC Bank to see loan growth recovering to approximately 12% compared to 5% year-over-year, with stable asset quality and improving operating leverage. A healthy loan mix toward SME/BB, unsecured, and mortgage segments will drive growth recovery and reduce drag from the corporate book.
Axis Capital projects that net interest margin (NIM) should bottom out in Q2FY26E, with normalization to FY25 levels expected by Q4FY26E. The firm notes that improving liability mix, including lower borrowing and incremental CASA (current account savings account), keeps the medium-term margin outlook healthy.
The research firm anticipates incremental return on assets (RoA) to cross 1.8% by Q4FY26E and climb to 1.9% in FY27E. Axis Capital’s new target price is based on a sum-of-the-parts valuation, with the core bank valued at 2.5 times 24-month-forward book value per share.
The firm also highlighted that a reduced gap with ICICI Bank on growth and return on assets for the core bank could improve HDFC Bank’s valuation, which currently trades at approximately a 14% discount.
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