DBS analyst Lim Rui Wen maintained a Buy rating on Hdfc Bank (HDB – Research Report) yesterday and set a price target of $79.50.
Lim Rui Wen has given his Buy rating due to a combination of factors including HDFC Bank’s strong financial performance and strategic advantages from its merger with HDFC Limited. The bank’s net profit for the fourth quarter of FY25 exceeded expectations, demonstrating robust growth both year-over-year and quarter-over-quarter. Additionally, the merger with HDFC Limited is expected to create significant synergies, allowing for enhanced cross-selling opportunities and improved funding costs.
Despite a temporary dip in return on equity post-merger, the long-term benefits are anticipated to drive share price appreciation. The bank’s asset quality remains strong, supported by a well-managed mortgage base, which is expected to sustain loan growth. Furthermore, the management’s strategy to reduce the loan-to-deposit ratio to pre-merger levels by 2026-2027 is seen as a positive move. The stock is trading at a premium compared to its peers, which is justified by its promising growth trajectory.
HDB’s price has also changed moderately for the past six months – from $63.500 to $73.770, which is a 16.17% increase.