Analysts pointed out that HDFC Bank's performance in the March quarter was respectable on the majority of indicators, in contrast to the preceding two quarters when there were several unfavorable results on earnings or the balance sheet. They think the stock values are reasonable.
Although the company's core performance came in somewhat better than expected, Antiqu Stock Broking lowered its FY25 profits projection by 2.5 percent due to the possibility of pressure on net interest margin (NIM) in the near future.The firm mainly stuck to its projections for FY26 profits. With a target price of Rs1,850, this firm has a "buy" recommendation on HDFC Bank.
Rather of extrapolating from the March quarter, Kotak Institutional Equities stated that it would like to be a little cautious. It said that it is unlikely to be an easy road to normalize several measures.
"We are likely to see quarters where the expectations are running ahead of execution, especially on the two key variables, i.e., deposits and NIM progression," it stated.
Nonetheless, Kotak kept its "Buy" rating with a fair value of Rs 1,750, stating that the stock is cheap at present prices and that it believes the company's medium-term outlook is quite comfortable, with a 15% compound annual growth anticipated.
According to Nirmal Bang, HDFC Bank has a strong long-term growth potential combined with a strong capital position, long-term merger synergies, and best-in-class asset quality. It stated that while NIMs and business growth will be the primary metrics to watch in the near future, a target of Rs 2,026 was suggested.
Nuvama recommended Rs 1,760 as the goal. Although it sees long-term franchise value, it thinks the quarterly earnings consistency will drive the short-term price performance. It anticipates that quarterly profit volatility will persist for a while.
ICICI Bank vs. HDFC Bank
"Even though HDFC Bank trades at a discount to ICICI Bank, the risk-reward ratio is still not very strong. The present relative valuation does not allow for execution failure, which is not the ideal result, thus we would prefer a larger discount," Kotak stated.
