HDFC Bank Share Price Declines Amid Mixed Views by Brokerages

HDFC Bank Share Price Declines Amid Mixed Views by Brokerages

VoM News Desk | September 20, 2023 | 05:36 AM IST | Breaking News | Follow on Google News

HDFC Bank Share Price Declines Amid Mixed Views by Brokerages

HDFC Bank’s share price experienced a decline of over 4% in early trading on BSE on Wednesday, following a mixed response from brokerage firms after the bank’s analyst and institutional investor meeting on Monday, September 18. The stock opened at ₹1,599, down from the previous close of ₹1,629.05, and fell to ₹1,563.50 in early trading. The bank’s market capitalization dropped to nearly ₹11.8 lakh crore on BSE.

HDFC Bank’s Performance Over the Past Year

HDFC Bank shares have significantly underperformed the benchmark Sensex over the past year. While the Sensex has gained approximately 13%, HDFC Bank shares have seen only a 4% increase. The stock reached its 52-week high of ₹1,757.80 on July 3, 2023, and its 52-week low of ₹1,365.05 on September 30, 2022, on BSE.

RBI Approval and Analyst Meeting Highlights

The Reserve Bank of India (RBI) approved the reappointment of Sashidhar Jagdishan as HDFC Bank’s managing director and chief executive officer for an additional three years until October 26, 2026. During the analyst meeting, HDFC Bank discussed the potential impact of its merger with parent company Housing Development Finance Corp. (HDFC), including a potential narrowing of net interest margin (NIM) by 25 basis points due to the combined effect of incremental cash reserve ratio (CRR) and excess liquidity.

Brokerage Opinions

Following the analyst meeting, global brokerage firm Nomura downgraded HDFC Bank stock to ‘neutral’ from ‘buy’ and reduced the target price from ₹1,970 to ₹1,800. Nomura cited several negative surprises from the meeting, including net worth adjustments negatively impacting FY24F BVPS (book value per share), NIM cuts in FY24F and FY25-26F, higher cost-to-income due to accounting changes, and an increase in NPAs in HDFC’s corporate loan book.

On the other hand, Goldman Sachs reiterated a ‘buy’ call on the stock with a target price of ₹2,051, implying a 26% upside potential. Goldman Sachs believes that HDFC Bank is well-positioned to gain substantial market share in both lending and deposits in the coming years. The bank is expected to continue growing its loan book at an 18% CAGR and achieve superior return ratios.

Domestic Brokerage Firms’ Views

Motilal Oswal Financial Services has a ‘buy’ rating on the stock with a target price of ₹1,950, while Nirmal Bang also maintains a ‘buy’ call with a target price of ₹1,935. Both firms are positive about HDFC Bank’s long-term prospects, citing its stable management, strong capital position, provision buffers, and historically lower valuation.

Investors should carefully consider these mixed opinions from brokerage firms and conduct their own research before making investment decisions related to HDFC Bank shares.

VoM News Desk

VoM News is an online web portal in jammu Kashmir offers regional, National & global news.