HDFC bank up 54% in the year; JP Morgan says ‘buy’

JP Morgan has raised the target for HDFC bankto Rs 1,975, from the previous target price of Rs 1,720; a near 15% increase. The shares have returned more than 54% since January, as against the BSE Sensex returns of 21.77% in the year.

The shares were trading flat at Rs 1,859.75 on Tuesday morning. The global asset management firm expects that HDFC bank’s earnings will grow at a steady pace, as there’s minimal asset quality risk for the bank. Further, JP Morgan estimates that the EPS will grow at 15% for the next three years.

The private sector lender had reported more than a 20% increase in net profit to Rs 3,893.84 crore for the first quarter of 2017-18 fiscal, as against Rs 3,238.91 crore in the April-June quarter of last fiscal. Total income rose to Rs 22,185.38 crore during the quarter under review, up 14.81% against Rs 19,322.63 crore in the same period last year. Net NPA reported by the bank stood at 0.44% of net advances as on 30 June as against 0.32% reported in the first quarter of the previous fiscal.

Sandip Bhatia, Head – India Equities, Macquarie Capital Securities too is bullish on the scrip. HDFC Bank, YES Bank and ICICI Bank are his bets from the financial services space, as told to ET Now last month. Despite such stellar outperformance by HDFC bank scrip in the year so far, Sandip believes that the Bank’s stock is attractive at these levels. The S&P BSE Bankex is up by 35% since January this year.

HDFC Bank