HDFC Bank share price: Will it hit Rs 2,000? Check HDFC Bank share price forecast

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HDFC Bank share price: What's happening?

HDFC Bank share price: HDFC Bank has been one of those companies that have given multibagger returns to investors in the last two decades. However, in the past 18 months, the HDFC shares have disappointed investors if we look at returns. 

In 2022, the HDFC Bank shares have fallen 3% compared to 10% gains given by Bank NIFTY. What is the reason behind the below-par performance of India's biggest private sector bank? We will explore the details in this article.

Quick fact: Despite the recent poor performance, HDFC Bank has delivered 67% returns in the last five years. Since the start of 2010, the HDFC Bank share has rallied over 750% and has been the biggest wealth creator for investors in India.

HDFC Bank share price: Deepdive

Why is HDFC Bank share price stagnant?

There is no direct reason for HDFC Bank Share not rising or not giving returns in line with other banking stocks. The company has reported a good set of quarterly numbers consistently, and fundamentally, HDFC Bank is still one of the best picks for investors. So what has changed that the HDFC Bank share price is not rising? Let us dig deep and look at the possibilities:

New management: Last year, Sashidhar Jagdishan left the bank leaving behind a legacy of nearly three decades. HDFC Bank was every investor's first pick - it is because of the former CEO. With the change in management, some investors are sceptical about whether the bank can continue to achieve the same growth rate as it had in the past. 

HDFC-HDFC Bank Merger: Though no analysts doubt that once the merger happens, we will have a much bigger and better entity (it may be amongst the top five-six banks globally). However, the merger news has opened up too many questions for investors (approvals, mutual funds reducing stake, strategy for viable functioning, etc). It could be one of the reasons for HDFC Bank's share underperformance.

Behind in digital initiatives: HDFC Bank is unable to compete with peers in using the digital platform to extract additional efficiencies. Strangely, when competitors are going digital, HDFC Bank plans to add 1500-2000 new branches every year. It will require huge capital investment and may leave the bank with reduced funds to pursue additional businesses.

HDFC Bank share price insight

Out of 989 trading days that HDFC Bank stock has seen in the last 4 years, below are the HDFC Bank share price movement insights:

  • HDFC Bank share price ended in green on 505 trading days
  • HDFC Bank share price ended in red on 484 trading days

HDFC Bank Apr-Jun 22 results: Highlights

The HDFC Bank share price may worry the existing shareholders. However, if you look at the most important aspect - how the bank's business is doing - there is nothing to worry about. Below are key highlights from HDFC Bank's June quarter results:

  • Net Profit: The net profit for the company grew 22.8% year-on-year to Rs 10,055 crore on the back of strong loan growth and a healthy rise in NII.
  • NII: Net Interest Income increased 10.2% YoY to Rs 18,872.7 crore while Net Interest Margin fell to an all-time low of 4%.
  • Asset quality: The gross NPA ratio reduced to 1.17% of total advances as against 1.26% in the last quarter and 1.32% in the year-ago period.
  • Deposits and Advances: CASA deposits grew by 22% on year with saving deposits at Rs 5.12 lakh crore and current account deposits at Rs 2.39 lakh crore.

HDFC Bank: Should you Buy, Sell or Hold?

Let us look at what brokerages have to say about HDFC Bank's share price:

Motilal Oswal: The Indian brokerage firm has given a BUY rating with a target price of Rs 1800 per share. They expect the bank to deliver a 20% PAT CAGR over FY22-24 with an RoA/RoE of 2%/17.5% in FY24. They expect the HDFC Banks hare to perform gradually as margins and revenue revive over FY23.

Emkay Research: The firm retained a BUY rating on HDFC Bank shares with a target price of Rs 1800 per share. As per the firm, better credit growth and a pick-up in fees will lead to a steady improvement in core profitability, while lower LLP should lead to healthy RoAs/RoEs of around 1.9%/17% over FY23-25E.

JM Financial: The firm has given a BUY rating on the stock with a target price of Rs 1640 per share. As per the firm, growth was led by a pick-up in retail loans and continued momentum in the CRB segment. Also, cost income is likely to remain elevated given the continued investment momentum at the bank.

LKP Securities: The firm has maintained a BUY rating on the bank with a target price of Rs 1709 per share. As per the brokerage firm, HDFC Bank is expected to outperform the sector in the long run led by healthy balance sheet growth, higher provision than the regulatory requirement in the balance sheet, and best-in-class underwriting and risk management practices.

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