Buy HDFC Bank, target price Rs 1300: Emkay Global

Emkay Global has given buy rating to HDFC Bank with a target price of Rs 1300. The share price moved up by 1.12 per cent from its previous close of Rs 1044.05. The stock’s last traded price is Rs 1055.

HDFC Bank Ltd., incorporated in the year 1994, is a banking company (having a market cap of Rs 580240.09 Crore).

HDFC Bank Ltd. key Products/Revenue Segments include Interest & Discount on Advances & Bills which contributed Rs 91787.88 Crore to Sales Value (79.94 % of Total Sales), Income From Investment which contributed Rs 20633.32 Crore to Sales Value (17.97 % of Total Sales), Interest On Balances with RBI and Other Inter-Bank Funds which contributed Rs 1828.93 Crore to Sales Value (1.59 % of Total Sales) and Interest which contributed Rs 562.52 Crore to Sales Value (0.48 % of Total Sales)for the year ending 31-Mar-2020.

Financials
For the quarter ended 30-06-2020, the company reported a Consolidated Interest Income of Rs 25978.00 Crore, up .23 % from last quarter Interest Income of Rs 25919.24 Crore and up 10.26 % from last year same quarter Interest Income of Rs 23560.50 Crore. The bank has reported net profit after tax of Rs 6940.88 Crore in latest quarter.

Investment Rationale
The brokerage retains Buy/OW stance in EAP with a TP of Rs 1,300 (based on 2.8x core bank Sep P/ABV + Subs value of Rs53), given its strong stress management capability and superior return ratios. Amid a spate of recent management churn and events, new top management will have an uphill task maintaining its historic management premium.

Promoter/FII Holdings
Promoters held 21.2 per cent stake in the company as of June 30, 2020, while FIIs held 30.1 per cent, DIIs 17.8 per cent and public and others 30.9 per cent.