Brokerage firm Motilal Oswal Financial Services has given a “buy” call for HDFC Bank shares due to the bank’s strong growth in retail and unsecured loans.
The brokerage maintained the target price at Rs 2,000 against the current market price of Rs 1,639.
HDFC Bank, which has agreed to merge with HDFC Investments and HDFC Holdings, will also support the stock.
“HDFC Limited will own 41 per cent of HDFC Bank after the merger. This will enable the bank to build up its housing loan portfolio and strengthen its existing client base,” the brokerage said.
In response to the merger deal, HDFC and HDFC Bank shares rose 14 percent and 11 percent, respectively, during the opening session on Monday.
Besides, the brokerage said HDFC Bank reported strong loan growth in the fourth quarter of FY22, led by a healthy recovery in retail loans.
“The commercial and corporate banking sector has also seen strong momentum, which is likely to support the growth in operating profit before savings (PPOP).
PPOP is the amount of income earned by a bank or a similar type of financial institution in a certain period of time, before taking into account funds for bad debts in the future.
Furthermore, the brokerage expects the margin trajectory to recover gradually during fiscal year 23.
ad / dpb
(The title and image for this report may have been reformulated only by the Business Standard staff; the rest of the content is automatically generated from a shared feed.)