HDFC Bank Share Price: Jefferies retains 'buy' rating on the stock, sees over 20% upside

HDFC Bank Share Price: Jefferies retains ‘buy’ rating on the stock, sees over 20% upside

Shares of Nifty 50 heavyweight HDFC Bank Ltd. gained up to a percent during Tuesday’s trading session as global broking firm Jefferies retained its ‘Buy’ rating on the country’s biggest private lender. Jefferies said that an improvement in margin will be key to increase the return on asset (RoA) and re-rating valuations.

The foreign broking firm’s target price of ₹1,800 per share on the counter signals an upside of over 20% from the stock’s closing levels on Monday.

The lender’s potential for credit growth over the next five years would build sensitivity to deposit market share gains, Jefferies highlighted in its latest note.

For instance, if HDFC Bank’s deposits record a 17-18% compounded annual growth rate (CAGR), then loans can grow at 13%.

Foreign Portfolio Investors have trimmed stake in HDFC Bank, during the January-March quarter, according to the lender’s shareholding pattern disclosed on the exchanges as of March 31, 2024.

HDFC Bank’s shares declined 15% during the January-March quarter, which was the worst quarter seen by India’s largest private lender since the January-March quarter of 2020.

Interestingly, while the overall FII stake has come down in HDFC Bank , two new names have emerged as prominent buyers during the quarter. While the December quarter shareholding only had Government of Singapore as the entity with a greater than 1% stake, the March shareholding has seen names like Vanguard Total International Stock Index Fund (1.17%) and the Government Pension Fund Global (1.44%) emerge as prominent shareholders.

Post the latest shareholding, Foreign investor room rises to 24.95% in HDFC Bank, according to Nuvama Alternative and Quantitative Research. Therefore, the figure is slightly short of the 25% minimum requirement for an augmented weightage in the MSCI indices.

“With the potential for further selling in this quarter, there may be a possibility of a weight up adjustment in the August review,” Nuvama wrote in its note.

Shares of HDFC Bank are trading 0.45% higher at ₹1,501.45 apiece on the NSE during today’s afternoon deals.