HDFC Bank gains 0.5% as Goldman Sachs says ‘buy’, raises target price by 33%

Shares of HDFC Bank gained over 0.5 percent in early trade on August 28 to Rs 1,571 after Goldman Sachs kept the ‘buy’ rating on the stock and raised the target price by 33 percent to Rs 2,087 per share.

At 10:20am, the HDFC Bank stock was trading 0.49 percent higher at Rs 1,569 on the NSE.

The Goldman Sachs stock call on HDFC Bank comes amid the recent market challenges faced by the bank due to the implementation of the RBI’s I-CRR (Internal Capital Adequacy Assessment Process with Computation of Risk-Weighted Assets) framework. The bank recorded a a decline of $6.8 billion in its market capitalisation as a result.

The implementation of I-CRR brought attention to liquidity shortages and raised concerns about deposit accumulation and Return on Assets (RoA). However, Goldman Sachs believes that worries over tepid deposit growth might be overstated. HDFC Bank managed to accumulate retail deposits worth Rs 66,600 crore in the first quarter.

These deposits are seen as stable and driven by the bank’s strong franchise. This development indicates a positive trajectory for the bank, aligning with Goldman Sachs’ optimistic stance on the bank’s performance.

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Brokerage Views

• Earlier, in a July 27 research report, Motilal Oswal recommended a ‘buy’ rating on HDFC Bank, with a target price of Rs 2,070, highlighting their positive outlook for the bank’s performance.
• Geojit Financial gave a ‘buy’ rating to the HDFC Bank stock with a target price of Rs 1,964 in a July 25 report.
• Prabhudas Lilladher assigned a ‘buy’ tag on the stock with a target price of Rs 2,025 per share in a research report on July 18. “Opex to remain elevated as stress formation to remain muted. Core earnings miss led by more opex; asset quality was better,” it said.

Re-appointment of Chief Risk Officer

On August 25, the HDFC Bank board approved the re-appointment of Sanmoy Chakrabarti as Chief Risk Officer (CRO) for five more years. Sanmoy Chakrabarti’s reappointment will start from December 14, 2023, and will remain in effect until December 13, 2028.

Also Read: HDFC Bank re-appoints Sanmoy Chakrabarti as Chief Risk Officer

Stock Performance

In the past six months, the performance of HDFC Bank and the benchmark Nifty Bank index has shown varying trends. The Nifty Bank, representing a group of major banking sector stocks, demonstrated a positive growth of 9.84 percent over this period. However, HDFC Bank, one of the prominent players in the sector, experienced a slight decline of 2.54 percent in its value over the same duration.

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