Global brokerage firm BofA downgraded the stock of HDFC Bank to ‘neutral’ from ‘buy’ resulting in the decline of bank’s shares nearly a percent to Rs 1,622 a piece on Wednesday.
HDFC Bank Representational image (Photo:IANS)
Global brokerage firm BofA downgraded the stock of HDFC Bank to ‘neutral’ from ‘buy’ resulting in the decline of bank’s shares nearly a percent to Rs 1,622 a piece on Wednesday.
Further, the target price was also reduced from Rs 1,850 to Rs 1,830 per share, citing that most of the positives were already priced in.
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BofA analysts expect HDFC Bank stock’s risk-reward to be in the narrow range over the next 12 months after the stock rallied 20 per cent from February lows driven partly by index weight optimism.
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The downgrade comes after HDFC’s stupendous rally seen from February lows when investors grew wary around HDFC Bank’s deficit deposit figures post its merger with erstwhile HDFC.
“We are navigating a tricky FY25 – wherein risk-reward is capped in the near-term. We expect catalysts to start playing out only in FY26. Moreover, a shallow rate cut cycle would delay NIM recovery for HDFC Bank,” the brokerage firm noted.
Notably, so far this year, HDFC stock declined over 4%, underperforming benchmark Nifty 50’s 11% rise during the same period.
Earlier, HDFC Bank had hit a 52-week high of Rs 1,791 apiece on July 3, 2024 fueled by hopes of increasing weightage in the MSCI EM index.
For the June-ended quarter (Q1FY25), deposit base grew by 24.4% on-year to Rs 23.8 lakh crore. Excluding the merger’s impact, deposits grew by 16.5% over the past year.
Its gross advances registered a 52.6% on-year increase to Rs 16.3 lakh crore, while it rose by 15% YoY if merger impact was excluded.
On an average basis, the bank’s advances under management were Rs 25 lakh crore for the June 2024 quarter, up 54.1% from Rs 16 lakh crore in the June 2023 quarter.
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