Banking Stock to Invest: If you are looking for a strong banking stock for investment, then you can keep an eye on HDFC Bank. This giant stock of the banking sector has the potential to give 33 percent return in the next one year. Looking at the bank’s strong growth outlook, brokerage houses are advising Nivea in the stock. The brokerage says that HDFC Bank’s business growth is better than its peers and the market share is increasing. The asset quality has improved and the goal is to double the balance sheet in the next 5 years. Better growth in each segment is showing a better outlook for the future.
Business Growth Stronger Than Pierce’s
Brokerage house Motilal Oswal has given investment advice in HDFC Bank and has set a target of Rs 1850 for the stock. In terms of current price Rs 1387, it can give 33 percent return. According to the brokerage report, HDFC Bank is in a strong position to continue sustainable and healthy growth. It will get the benefit of the initiatives that the bank has taken recently and has expanded in digital offerings. The business growth of the bank is strong as compared to its peers, due to which the market share is continuously increasing. While the growth in the retail segment has been maintained, the commercial and rural segment has also shown strong performance. Pickup has also been seen in wholesale loans.
Expect good growth going forward
The brokerage says that the earnings of the bank have been as per the estimates in the March quarter. NII and PPOP growth moderated due to margin pressure. There is a steady improvement in the asset quality of the bank. The restructured book is under control and it has come down to 1.14 per cent of the total loan. Healthy PCR and provisioning buffer are giving comfort on asset quality. The brokerage estimates that the loan and PAT CAGR may be 18 percent and 20 percent in FY22-24. At the same time, FY24 RoA/RoE is estimated to be 2.1 percent and 17.8 percent.
goal of doubling the balance sheet
Brokerage house JM Financial has also advised BUY in HDFC Bank and has given a target of Rs 1690. According to the report, the target of the bank management is to double its balance sheet in the next 5 years. This seems possible due to strong growth in commercial and rural banking and momentum in retail assets, uptick in vehicle loans, and strength in card business. However, due to the merger with HDFC, there may be a RoE impact in the near term. However, the management is confident about the outlook ahead. The brokerage says that overall downside risk is visible in this.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of digitnews. Markets are risky, so take expert opinion before investing.)