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Investing.com - CLSA has raised its price target on HDFC Bank Ltd (NSE:HDBK) (HDFCB:IN) (NYSE:HDB) to INR2,300 from INR2,200 while maintaining an Outperform rating following the bank’s quarterly results. The banking giant, currently valued at $176.37 billion, has seen its stock climb nearly 28% over the past six months and trades near its 52-week high of $78.14.
The bank reported first-quarter fiscal year 2026 results that exceeded CLSA’s estimates, with net interest income and pre-provision operating profit beating expectations by 2% and 10% respectively, according to analyst notes. Trading at a P/E ratio of 21.48, HDFC Bank maintains a steady dividend yield of 0.79% and has consistently raised its dividend for five consecutive years, according to InvestingPro data.
CLSA highlighted strong quarterly average deposit growth, both in current and savings accounts (CASA) and total deposits, as key positives from the quarter. The bank’s net interest margin (NIM) performance also impressed analysts, with only an 11 basis point core NIM reduction compared to the 15 basis point reduction CLSA had expected for large banks.
The financial institution maintained stable asset quality while operating expenses remained flat quarter-over-quarter, which CLSA noted as another positive from the results. HDFC Bank recognized a Rs91 billion gain from the IPO of its subsidiary, HDB Financial, and added Rs90 billion to its floating provision buffer.
CLSA kept its fiscal years 2026-2028 estimates largely unchanged, with the price target increase primarily driven by changes in cost of equity assumptions rather than earnings revisions. According to InvestingPro’s Fair Value analysis, HDFC Bank currently appears slightly undervalued, though analysts anticipate a sales decline in the current year.
In other recent news, HDFC Bank’s subsidiary, HDB Financial Services, successfully achieved full subscription for its $1.5 billion initial public offering, marking India’s largest IPO in 2024. This development reflects strong investor interest and indicates a positive trend in the country’s capital markets. Additionally, UBS has raised its price target for HDFC Bank to INR2,250, while maintaining a Buy rating, following the bank’s quarterly financial results that showed a profit after tax of Rs176.2 billion, slightly above UBS estimates. The bank reported a 10% year-over-year increase in net interest income and a significant 20.6% growth in core pre-provision operating profit, driven by reduced operating expenses. Axis Capital (NYSE:AXS) also raised its price target for HDFC Bank to INR2,300, citing a recovery in loan growth and a healthy loan mix. The firm expects the bank’s net interest margin to stabilize in the coming years, with a favorable medium-term outlook. Meanwhile, the outcomes of HDFC Bank’s recent board meeting were disclosed in a Form 6-K filing with the SEC, although specific details were not provided. Investors are encouraged to refer to the full filing for comprehensive information on the board’s decisions.
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