HDFC Bank shares down 17% from December high: Price targets, technicals, outlook and more

Shares of HDFC Bank have fallen 17.58% from their December 2023 high leaving investors worried on the returns on their portfolios. The market heavyweight, which closed at Rs 1709.25 on December 29 fell to a low of Rs 1408.50 on BSE today. The Nifty Bank too is down 1767 pts or 3.6% during the period.

In comparison, the benchmark Sensex gained 194 pts or 0.26% during the last 1.5 months.

The banking stock is down 16% since the lender announced its Q3 earnings.  

However, in news that could shore up the stock, Morgan Stanley shared an 'overweight' rating on February 15 with a price target of Rs 2,110 per share, amounting to an upside of 50 percent from the last close.

Analysts at Morgan Stanley shared their bullish call, saying that accelerated market share gains would improve CASA cross-selling in upcoming quarters. "The company gave details on home loan business after the merger. The turnaround time has improved amid higher market share gains," the brokerage firm noted.

The bank management on February 15 said the lender reported a 3.6 percent sequential growth as of December 2023 and, after the merger, savings accounts for incremental disbursals have moved to 80 percent from 35 percent.

Market share of the bank has climbed 18-20 percent on incremental disbursals. On a sequential basis, the bank clocked a growth of 3.6 percent, which was the highest among its peers in home loans.

Shares of HDFC Bank are trading near their 52-week low hit two sessions ago. They fell to a yearly low of Rs 1363.45 on February 14. In the current session, the stock was trading at Rs 1423 on BSE. The banking stock is trading neither in the oversold nor in the overbought territory as the relative strength index (RSI) of HDFC Bank stands at 35.8. Market cap of HDFC Bank stood at Rs 10.80 lakh crore amid a rally in the broader market today.

Total 6.41 lakh shares of the firm changed hands amounting to a turnover of Rs 90.87 crore on BSE. HDFC Bank stock has a one-year beta of 0.6. This signals the stock has low volatility. 

Financial Services firm Motilal Oswal has a price target of Rs 1,950 to the banking stock.

HDFC Bank’s margin came largely flat, which was slightly below its expectations, even as the Bank deployed excess liquidity and significantly drew down the LCR ratio, said the brokerage.

"Loan growth was healthy driven by growth in retail and continued traction in Commercial and Rural Banking. Asset quality ratios improved while provision coverage ratio (PCR) also inched up to 75 per cent. The Bank has continued to maintain 0.6 per cent buffer of floating plus contingent provisions, which provides additional comfort. Management suggested that NIMs will improve gradually over the coming years, which along with an improvement in operating leverage will enable the Bank to deliver healthy return ratios," the brokerage added. 

 

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