HDFC Bank Q4 results fail to move the needle for investors. Should you sell?

While maintaining buy stance on HDFC Bank, Jefferies has raised its target price on the stock to Rs 1,880 saying that the key positive was a slight rise in NIMs.

Morgan Stanley maintained an overweight rating with a target price of Rs 1,900 and said the headline PAT missed estimates owing to higher one-time staff costs and floating provisions. Domestic brokerage ICICI Securities upgraded the stock to buy from add with an unchanged target price of Rs 1,850.

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Analysts at Kotak Equities said the stock is inexpensive at these levels, as the medium-term outlook on the business looks extremely comfortable to report a 15% CAGR. "However, on a relative basis, the risk-reward is still not compelling, even as it trades at a discount to ICICI Bank. We would prefer for a wider discount, as the current relative valuation does not give any headroom for disappointment in execution, which is not the best outcome," Kotak said, while sticking to its earlier target price of Rs 1,750 on the stock.

Noting that the gradual retirement of high-cost borrowings, along with an improvement in operating leverage, will boost return ratios over the coming years, Motilal Oswal estimated HDFC Bank to deliver a steady 18% CAGR in deposits and sustain a 13.5% CAGR in loans over FY24-26.

The brokerage's target price is among the highest at Rs 1,950.

The stock, which has had a rich history of compounding wealth over the decades, has been underperforming for the last few years. On a three-year scale, the stock has gained only about 7% as investors are yet to see the fruits of a reverse merger with parent entity HDFC Ltd.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)