In conclusion, the upgrade to a Buy rating reflects Nomura’s positive outlook on HDFC Bank’s ability to maintain robust deposit growth and asset quality, even as the bank navigates a softer loan growth outlook and prepares for future loan growth acceleration. The new price target of INR1,920 represents Nomura’s confidence in the bank’s ongoing performance and prospects. InvestingPro data highlights the bank’s commitment to shareholder returns, having raised its dividend for four consecutive years, with a current yield of ~1%. For detailed insights into HDFC Bank’s valuation, financial health, and growth prospects, access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. InvestingPro data highlights the bank’s commitment to shareholder returns, having raised its dividend for four consecutive years, with a current yield of ~1%. For detailed insights into HDFC Bank’s valuation, financial health, and growth prospects, access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. Subramanian’s analysis highlighted HDFC Bank’s third-quarter pre-tax profit of INR220 billion, which marked a 12% year-over-year increase and met the firm’s estimates. The bank’s return on assets (RoA) remained stable quarter-over-quarter at 1.8%, despite a slight 5 basis points decline.
In conclusion, the upgrade to a Buy rating reflects Nomura’s positive outlook on HDFC Bank’s ability to maintain robust deposit growth and asset quality, even as the bank navigates a softer loan growth outlook and prepares for future loan growth acceleration. The new price target of INR1,920 represents Nomura’s confidence in the bank’s ongoing performance and prospects. InvestingPro data highlights the bank’s commitment to shareholder returns, having raised its dividend for four consecutive years, with a current yield of ~1%. For detailed insights into HDFC Bank’s valuation, financial health, and growth prospects, access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. The analyst commended the bank’s ability to deliver on deposits while preserving NIM and RoA in challenging economic conditions.
Although there was a slight increase in slippages by about 15 basis points quarter-over-quarter to 1.4%, this was attributed to seasonal agricultural slippages, which, when excluded, indicated stable asset quality. The credit cost remained largely as expected at 50 basis points, helped by a significant 210 basis points quarter-over-quarter drop in the provision coverage ratio and a contingent provision write-back of INR 3 billion.
Despite these positive core asset quality trends, Nomura has revised its loan and deposit growth estimates downward by 3-6% for the fiscal years 2026-27. However, Subramanian expressed confidence in HDFC Bank’s positioning relative to peers in terms of asset quality. The analyst also suggested that any potential easing of system liquidity could further boost the bank’s deposit growth.
In conclusion, the upgrade to a Buy rating reflects Nomura’s positive outlook on HDFC Bank’s ability to maintain robust deposit growth and asset quality, even as the bank navigates a softer loan growth outlook and prepares for future loan growth acceleration. The new price target of INR1,920 represents Nomura’s confidence in the bank’s ongoing performance and prospects.
In other recent news, HDFC Bank has seen an upgrade in their stock from Neutral to Buy by BofA Securities. This shift, which also includes a price target increase to INR1,960 from INR1,830, is due to a change in the market’s attention towards asset quality risks and a general slowdown in credit growth, especially in high-risk segments. BofA Securities analysts have noted that while growth concerns and net interest margin outlook previously led to a downgrade, recent changes in the system outlook have positively altered the risk-reward balance for HDFC Bank.
Despite challenges like deposit competition and slower loan growth, these risks are believed to be factored into consensus expectations. Additionally, a change in HDFC Bank’s management strategy to speed up the transition period to meet loan-to-deposit ratio targets is expected to strengthen investor confidence. The upgrade indicates HDFC Bank’s stock now presents a more favorable risk-reward profile compared to its peers, making it a more attractive investment in the current environment. These are the recent developments surrounding HDFC Bank.
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