HDFC Bank share price hits new 52-week high on jump in Q3 net profit; should you buy?

HDFC Bank share price gained 2.3 per cent to hit a fresh 52-week high of Rs 1,500 apiece on BSE today. The bank reported an 18.1 per cent on-year growth in net profit at Rs 8,758 crore for the quarter ended December 31, 2021. The bank posted a net profit of Rs 7,416 crore in the same period last year. HDFC Bank’s net interest income for the third quarter grew 15.1 per cent to Rs 16,317 crore helped by growth in advances, which was at 15.6 per cent. While other income during the same period stood at Rs 7,443 crore. Domestic research and brokerage firms Motilal Oswal Financial Services and LKP Securities have given a ‘buy’ rating to the stock with a potential upside of up to 17 per cent from the previous close.

HDFC Bank share price has more than doubled from March 2020 low of Rs 739 apiece on BSE. Analysts at Motilal Oswal Financial Services have given a ‘buy’ rating to the stock with a target price of Rs 1,720 apiece, implying a 17 per cent rally. They have marginally increased their earnings estimates and expect a 20 per cent PAT CAGR over FY20–FY23E –with ROA/ROE of 2.1%/18.2% for FY23E. The domestic brokerage firm said that HDFC Bank has delivered strong business growth as the economy continues to recover from the COVID-19 pandemic shock. It noted that the bank’s operating performance remains steady, aided by healthy revenue growth, improving margins, and controlled opex.

In the last three months, HDFC Bank shares have surged 38 per cent. HDFC Banks’ total deposits were up 19 per cent to Rs 12 lakh crore. While total advances as of December- end stood at Rs 10.8 lakh crore an increase of 15.6 per cent. LKP Securities noted that HDFC Bank expected to outperform the sector led by healthy growth in operating income, much higher provision than the regulatory requirement in the balance sheet, strong capital cushion of 17 per cent at CET1 level and the best in class underwriting and risk management practices. The analysts at the brokerage firm see 12 per cent rise in the share price. It has pegged a 12-month price target of Rs 1,643 apiece and expects HDFC Bank to remain one of the best among all the lending businesses.