Target: ₹1,740

CMP: ₹1,380.25

We recently attended the HDFC Bank analyst meet where the strategy and outlook across business verticals was laid out while further issues relating to the merger were also clarified by the MD&CEO, Jagdishan.

Some key takeaways were: post-merger balance sheet might double every 5 years and liability growth would outpace that of assets; RBI may approve the holding company structure and a NOHFC may not be required; CRB would remain the growth engine while retail could surpass corporate; and more aggression would be seen in Government businesses (assets and liabilities) which could intensify competition for SBI and other PSU Banks.

Distribution network is guided to double over 3 years and 1,500-2,000 branches per annum could be added. Sixty per cent of the existing branches have a vintage of less than 10 years which could lead to robust liability accretion. Hence liabilities growth would outpace that of assets while CASA would normalise to 40-42 per cent from 48 per cent now.

On the flipside, acquisition strategy of a PSU bank customer would be the key.

We maintain our estimates for FY23/24 and Retain Buy with TP of ₹1,740 based on 3.2x FY24 ABV.

Published on

June 03, 2022