During Tuesday’s trading session, shares of HDFC Bank Ltd., the heavyweight of the Nifty 50, saw a gain of up to 1% as global broking firm Jefferies maintained its ‘Buy’ rating on the largest private lender in the nation. According to Jefferies, raising margin will be essential to raising return on asset (RoA) and readjusting valuations.
The countertarget price of ₹1,800 per share set by the foreign broking firm indicates a gain of more than 20% from Monday’s closing levels of the stock.
According to Jefferies’ most recent note, the lender’s potential for credit growth over the next five years would increase sensitivity to gains in deposit market share.
Loans could grow at a rate of 13%, for example, if HDFC Bank’s deposits show a 17–18% compound annual growth rate (CAGR).
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According to HDFC Bank’s shareholding pattern disclosed on the exchanges as of March 31, 2024, foreign portfolio investors reduced their stake in the bank during the January–March quarter.
The January-March quarter saw a 15% decline in HDFC Bank’s shares, making it the worst quarter for the largest private lender in India since the January-March quarter of 2020.
It is interesting to note that during the quarter, two new names emerged as significant buyers despite the fact that the overall FII stake in HDFC Bank has decreased. In the March shareholding, notable shareholders include the Government Pension Fund Global (1.44%) and Vanguard Total International Stock Index Fund (1.17%), whereas the only entity with a larger than 1% stake in the December quarter shareholding was the Government of Singapore.
According to Nuvama Alternative and Quantitative Research, the foreign investor room in HDFC Bank has increased to 24.95% following the most recent shareholding. As a result, the amount falls just short of the minimal 25% needed for an increased weighting in the MSCI indices.
Nuvama stated in its note that “there may be a possibility of a weight up adjustment in the August review, given the possibility of further selling in this quarter.”
In today’s afternoon trade, HDFC Bank shares are up 0.45% at ₹1,501.45 a share on the NSE.
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