Global brokerage firm Nomura has a ‘Neutral’ stance on HDFC Bank, with a target price of ₹1,720 per share. The target price ascribed by Nomura implies a potential upside of about 4% from the stock’s last closing levels.

The foreign brokerage noted that a soft loan growth and healthy quarter-on-quarter deposit growth was seen during its second-quarter update.

The bank’s deposits have grown 5% in-line with the banking sector, while gross loans remained flat. The loan-to-deposit ratio decreased by 400 basis points to 101%.

In contrast, Morgan Stanley maintained a ‘Buy’ rating with a target price of ₹1,850 per share, highlighting steady year-on-year deposit growth and a slight 1.3% increase in loans quarter-on-quarter, primarily driven by the wholesale segment.
The year-on-year loan growth slowed to 8% from 11% in the previous quarter, but the liquidity coverage ratio improved to 127% from 123%.

The bank said its retail loans grew around ₹33,800 crore; commercial and rural banking loans rose ₹38,000 crore; and corporate and other wholesale loans fell ₹13300 crore over June 30, 2024.

HDFC Bank’s CASA deposits stood at ₹8.83 lakh crore, a rise of 8%, compared to ₹8.17 lakh crore for the corresponding quarter in the year-ago period.

The bank is also expected to attract $1.8 billion inflows as global index services provider MSCI may increase its weightage.

According to HDFC Bank’s shareholding pattern in September, FII headroom remains safely above 20%. “As a result, the second phase (and last) of the weight increase will occur during the November ’24 rejig, which is expected to lead to approximately $1.8 billion in inflows in HDFC Bank,” said Nuvama Alternative & Quantitative Research in a note.

HDFC Bank’s recent performance has caused investor concerns, with shares ending 1.23% lower at ₹1,661.25 on Friday.