HDFC Bank was in focus on Friday after Credit Suisse raised the target price to Rs 2,075 from Rs 1,955. This implies an upside of 6 percent.The global research firm expects the bank to undertake its next capital raise in FY19 and highlighted how the stock has historically performed well around capital raise.
Further, it said that the bank has CET1 at 12.2 percent, similar to the levels seen in FY15.Credit Suisse said that if USD 3 billion is raised, then expect 4% dilution and increase in capital base by 20%. It also said that the amount was enough to support growth for next 3-4 years, if the loan growth is at 23-25 percent.The stock was in the news recently for its management commentary.The banking sector has the potential to touch double-digit loan growth next year as there are signs of corporate demand picking up and other credit avenues stabilising, a top official of HDFC Bank had said.
After clocking just under 10 percent growth for almost a year, credit expansion fell to under 5 percent starting November 2016. Since then it has been struggling to cross the double digit mark on sustained basis due to the impact of demonetisation and the implementation of Goods and Services Tax (GST).”The demand so far has been essentially driven by working capital and some short term loans and, may be, a little bit of brownfield capex but you have not had a meaningful private investment especially from the private sector to give a boost to corporate credit demand,” Deputy Managing Director Paresh Sukthankar told PTI. At 09:42 hrs HDFC Bank was quoting at Rs 1,820.00, up Rs 10.95, or 0.61 percent, on the BSE. It touched an intraday high of Rs 1,825.20 and an intraday low of Rs 1,811.70.