HDFC Buzz: Should You Purchase This Stock Also? LIC Is Buying A 9.99% Stake In HDFC Bank. 22-40% Increase Predicted

According to the regulatory filing, RBI has recommended LIC purchase the aforementioned significant stake in the Bank by January 24, 2025, or within a year. Furthermore, LIC is required to make sure that, at all times, the total amount of its holdings in the Bank does not exceed 9.99% of its paid-up share capital or voting rights.

HDFC Bank’s market capitalization, which was Rs 10,90,001.31 crore, was down 1.41% to Rs 1435.30 per share at the close on the BSE.

HDFC Bank’s market capitalization fell below Rs 11 lakh billion after the Q3 results. When it comes to market share, HDFC Bank is the biggest bank in India.

HDFC Bank’s net profit for the third quarter of FY24 was Rs 16,372 crore, up 33% from Rs 12, 259 crore in the same period the previous year. However, its net interest income (NII) increased to Rs 28,470 crore, a 24% YoY increase. The core net interest margin of the bank was 3.6% based on assets that generated interest as opposed to 3.4% based on total assets.

Pre-provision operating profit increased by 24.3% to Rs 2,365 crore. As for asset quality, gross non-performing assets (NPA) decreased to 1.26% from 1.34% in Q2FY24. By the conclusion of Q3FY24, net NPA was 0.31% of net loans.

Following the Q3 earnings, brokerages commented on the share price of HDFC Bank as follows:

1,762 rupees Goal Price, Possible Gain: 22.8%
In a research report, LKP Securities said that “1) robust balance sheet growth, 2) significantly higher provision than the regulatory requirement in the balance sheet, and 3) best-in-class underwriting and risk management practices will likely lead HDFC Bank to gradually overcome the merger overhangs.” We anticipate HDFC Bank will continue to rank among the top lending companies in light of these advantages. Consequently, we keep our BUY rating on the bank unchanged, with a revised target price of Rs 1762.”

Target Price of Rs 1,896 with a 32% potential upside
Additionally, BOB Caps said in its note that “In addition to introducing FY26 forecasts and rolling valuations forward to Mar’26E, we revise our FY24/FY25 PAT estimates by -6%/+1% to bake in the results.” This results in a revised SOTP-based TP of Rs 1,896 (vs. 1929), where we use the Gordon Growth Model to value the core company at 2.4x FY26E ABV (vs. 2.9x FY25E ABV) and add Rs 223/sh for subsidiaries. While the bank’s growth prospects are still favorable, it would be important to keep an eye on margin improvement.”

Target Price of Rs 1,994 with a 38.92% potential upside
In the meanwhile, Nirmal Bang said in its note, “We are valuing HDFC Bank at 2.7x December 2025E ABV as against (2.75x September 2025E P/ABV) and adding subsidiary value per share of Rs 180 we maintain our target price at Rs 1994 and rating as ‘BUY’.”

Target Price of Rs 2,000, Potential Gain of 39.34%
Conversely, Yes Securities kept an Add on the stock price, but among other brokerages, it set the highest target price of Rs 2,000 on HDFC Bank.

“We maintain a less-than-bullish ADD rating with an unchanged price target of Rs 2000,” Yes Securities analysts said in their research. “We value the standalone bank at 2.7x FY25 P/BV for an FY24E/25E/26E RoE profile of 16.6/18.0/18.6%.” Based on SOTP, we value each subsidiary share at Rs 209 in our system. In our Sector Initiation Report from June 2021, we had started with a less-than-bullish ADD rating for HDFCB, and the stock has since underperformed.”