Shares of HDFC Bank were in focus on Monday after the bank announced a dividend of Rs 15.50 or 1,550 per cent per equity share with a face value of Re one each for FY22, the highest in rupee terms in the last 11 years.
The private sector lender had announced a dividend of Rs 16.50 per equity share in June 2011, its second highest ever dividend announced since April 2001.
Of late, the shares of largest private sector bank have been in the grip of bears. The stock declined two per cent to hit an intraday low of Rs 1,323.90 on BSE on Monday. Currently, it is hovering around its 52-week low of Rs 1,292.
The bank's Q4 results were below estimates. In its Q4FY22 results, HDFC Bank reported that its standalone net profit jumped 22.8 per cent to Rs 10,055.2 crore for the quarter ended March 31, 2022. Meanwhile, net profit for the year ended March 31, 2022 was Rs 36,961.3 crore. It was up 18.8 per cent over the year ended March 31, 2021.
The investors had a tough week as the equity benchmark Sensex lost 1,141.78 points or 1.95 per cent. The market capitalisation (mcap) of HDFC Bank also dived Rs 60,536.97 crore to reach Rs 7,51,801.60 crore.
Should you buy the dip?
"We estimate 20 per cent PAT CAGR over FY22-24E, with RoA/RoE at 2.1 per cent 17.8 per cent for FY24. HDFC Bank remains one of our preferred BUYs and we expect the stock to recover gradually as revenue and margin revive over FY23, while clarity emerges on several aspects related to the merger with HDFC Ltd," Motilal Oswal said in its recent report.
Yes Securities has an 'Add' rating on HDFC Bank with a revised price target of Rs 1,668. "We value the standalone bank at 3.0x FY23 P/BV for an FY22/23E/24E RoE profile of 16.7/15.1/15.2 per cent. We assign a value of Rs 239 per share to the subsidiaries, on SOTP," it said.
LKP Securities also retained its bullish view on HDFC Bank with a target price of Rs 1,831, indicating a growth of nearly Rs 30 per cent from the current market price of Rs 1,411.
“The management emphasised the slower NII growth will be compensated by lower specific provisioning expenses. We believe, superior underwriting practices, higher liquidity, adequate coverage and strong capital position makes the bank best in class and thus, we recommend ‘Buy’ on HDFC Bank.”
KRChoksey has maintained a 'Buy' rating on the stock with a target price at Rs 1,997 per share, implying a P/ABV of 3.7x P/ABV to adj. book value of Rs 538.7 per share.
"We see HDFCB’s current valuation to re-rate on the back of improved margins and operating profits with increased contribution from the credit card business and adoption of new digital initiatives, strong business traction led high yielding segments and successful progress and approvals on the HDFC & HDFCB merger," the brokerage house added.
On April 4, HDFC announced that it will merge operations with HDFC Bank. Shares of the mortgage player and the largest private sector bank were on a roll after the merger announcement. The combined market cap even surpassed that of TCS, the country’s second-largest company in terms of market capitalization.
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