Where are HDFC Bank shares headed? Lender gave 23% return in 1 year, clocks new high on Dalal Street today

Following the market trend, private lender HDFC Bank stock faced some heat. The bank finished at Rs 2406.40 per piece down by Rs 26.55 or 1.09%. While the drop in shares was determined by overall market performance, HDFC Bank did not fail to surprise investors today itself. In fact, this bank touched an all-time high on Tuesday's trading  session, by earmarking Rs 2,449. With this, HDFC Bank has given nearly 23% return in a year's time to its investors. A year ago same day, the bank's share was trading at Rs 1,991 levels.

Where is HDFC Bank headed? 

Mona Khetan and D. Vijiya Rao analysts at Reliance Securities said, "The Bank’s strong lending and deposit franchise, healthy capital position and impeccable asset quality performance across cycles have been aiding stable RoAs over the years. At CMP, the stock trades at 1-year forward multiple of 3.7x. Marginally tweaking our 
earnings estimates for FY20E/FY21E, we maintain our BUY recommendation on the stock with an SOTP-based Target Price of Rs2,650 (based on 3.7x FY21E adjusted PBV and the value of its subsidiaries, implying a FY21 P/ABV of 3.8x)."

Earlier, analysts at JM Financial said, "Positively, the pick up in wholesale loans, which management largely attributed to short-term loans to higher-rated corporates, has not come at the expense of NIMs. Deposit growth was strong (+8% QoQ), as CASA inched up 170bps QoQ to 42%. HDFCB’s best-in class PCR is now at 71% (117% including general and floating provisions) as slippages moderated in the quarter to 2%. HDFCB remains one of our top picks in the banking sector. Maintain BUY."

CLSA has given the highest target price on HDFC Bank. 

"An uptick in Casa will be key to loan-growth and margins next year," says CLSA. Further the rating agency added, "We were encouraged to see better rise in its debit card base and a higher spread on corporate loans. Asset quality was stable, but we would watch out for trends in unsecured retail and business banking where management slowed to test asset quality."

For outlook ahead, CLSA says, "FY19 was a tad weaker for subsidiaries and HDB-FS may look to raise capital over the 12-18 months. We see a 21% profit Cagr over FY19-21CL. We roll-forward our target price from Rs2,730 to Rs2,850 and maintain our BUY recommendation."