HDFC Bank Q2 Results - IDBI Capital Maintains 'Buy' Rating On The Stock, Revises Target Price; Here's Why

IDBI Capital Report

HDFC Bank Ltd. reported slower credit growth at 1% QoQ (7% YoY) while strong deposit growth stood at 5% QoQ (15% YoY) led by focus on lowering of CD ratio, in line with the guidance.

Management guided for improvement in credit growth similar to industry average during FY26 and higher than industry during FY27. NIMs remained stable at 3.5% as cost of funds remain stable; however, we need to watch out for impact of rate cut on NIMs as 69% loan book is linked to EBLR.

Asset quality remains stable as GNPA stood at 1.36% versus 1.33% QoQ led by higher write offs. Net interest income grew by 1% QoQ while pre-provision operating profit grew by 3% QoQ due to higher other income (up 8% QOQ). PAT grew by 4% QoQ led by lower tax rate.

We largely maintain FY25E/FY26E estimates as margin improvement needs to be seen. We maintain Buy rating with the target price of Rs 1,970 (earlier Rs 1,872) valuing parent business at Rs 1,765 at 2.3 times price/adjusted book value FY26 (earlier at 2.2 times).

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