Shares of HDFC Bank Ltd have fallen 16% this year, leaving investors of the private lender guessing where the large cap stock is headed. HDFC Bank shares have turned negative for the period up to a year, signaling that the stock is trading in the bear market zone in the short term. The stock slipped nearly 12% each in a year and three months. In six months, HDFC Bank was down 10%.
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The stock fell to a 52-week low of Rs 1363.45 reached on February 14, 2024.
In the current session, the banking stock fell 0.41% to Rs 1426.30 against the previous close of Rs 1432.20 on BSE. The banking stock is trading neither in the oversold territory nor in the overbought zone as the relative strength index (RSI) of HDFC Bank stands at 46.4.
Market cap of HDFC Bank fell to Rs 10.83 lakh crore amid a correction in the broader market.
Total 0.18 lakh shares of the firm changed hands amounting to a turnover of Rs 2.59 crore on BSE. HDFC Bank stock has a one-year beta of 0.7. This signals the stock has low volatility.
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The large cap stock is trading higher than the 5 day, 10 day, 20 day but lower than the 30 day, 50 day, 100 day, 150 day and 200 day moving averages.
Incred Equities has assigned a target price of Rs 2,000 to the lender. It has an ADD rating on the stock.
It listed out key business triggers to watch out for in coming months
1. Strong loan growth coming from HDFC merger synergies and new branches opened.
2. Aggressive branch expansion done in FY23 and a similar trend in FY24F-25F to improve growth visibility from new branches in rural and semi-urban regions.
3. With the merger of HDFC nearing completion and new branches set up in semi-urban and rural areas, the next phase of growth to drive a rerating for HDFC Bank.
Bull-case valuation: Assuming a 10% beat to our estimates and a higher multiple of 2.7x, the target price can be Rs 2,200.
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Bear- case valuation: Assuming a 10% miss to our estimates and a lower multiple of ~2.0x, the target price can be Rs 1,600.
“We have an ADD rating on the stock with a target price of Rs.2,000, corresponding to 2.5x FY25F P/ABV,” said the brokerage.
Brokerage HSBC has a buy call on the banking stock with a target price of Rs 1750.
“Expectations of high loan growth, not deposits, are at core of recent disappointments Therefore, lowering loan growth may actually be beneficial for stock as it would be positive for NIM/RoA outlook. The stock offers possible returns of 15-29% CAGR over FY24-27estimates,” said HSBC.
Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
