HDFC Bank continues to deliver strong business growth versus peers, resulting in market share gains, said analysts at Motilal Oswal. This was led by a healthy pickup in the retail segment, while commercial and rural banking continues to remain robust. 

The brokerage said that earnings were in line, despite making additional contingent provisions to strengthen its balance sheet. “High provision coverage and contingent provision buffer provide comfort on asset quality. Pick up in loan growth particularly retail would aid NII and margins which would drive profitability,” Motilal Oswal note stated. It has maintained its Buy rating on the stock with a revised target price of ₹2,000 per share.

HDFC bank’s asset quality improved on a sequential basis, with gross non-performing asset ratio at 1.35%, as compared with 1.47% as of June 30. Net NPA ratio too fell 8 basis points quarter-on-quarter to 0.4%. Total provisions for the bank increased to ₹3,925 crore.

Those at ICICI Securities have also maintained ‘Buy’ rating on India’s largest private lender’s stock. They have also increased the target price to ₹1,955 from earlier of ₹1,818. 

“Demand resolution is back to pre-covid levels and recoveries are encouraging. Bank is building digital and franchise capabilities to capture growth opportunities. Cumulative provisioning is equivalent to 2.2% of advances against 2.9% of stress pool,” ICICI Securities note said. Though, it sees adverse behaviour of elevated restructured pool, continued investments, which will keep opex high as key risks.

HDFC Bank’s total provisions for the bank increased on a yearly basis however declined on a sequential basis to ₹3,925 crore.

Lower provisioning aid earnings while retail growth set to accelerate, said Nirmal Bang in a note on the bank. “Balance sheet capitalisation remains strong with tier-I ratio of 18.7%. We remain sanguine about the bank’s growth prospects given that it is taking multiple measures to capture emerging opportunities in commercial/rural and retail banking. We maintain BUY on the stock with a TP of ₹1,962.”

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.