HDFC Bank Shares Fall Over 4% Amid Market Sell Off; Kotak Institutional Equities Upgrades Stock to Buy
Shares of HDFC Bank Ltd. declined sharply on Monday, March 9, mirroring the broader weakness in Indian equity markets during the morning session. Despite the drop in the stock price, brokerage firm Kotak Institutional Equities upgraded its rating on the country’s largest private sector lender, citing limited downside at current levels.The stock was trading 3.3% lower at ₹828.6 on Monday. Over the past one month, HDFC Bank shares have declined by about 12%.
Kotak Institutional Equities Upgrades Rating to Buy
Kotak Institutional Equities has upgraded HDFC Bank to a Buy rating from its earlier Add recommendation. The brokerage has set a price target of ₹1,050 per share, indicating a potential upside of roughly 25% from the current market price.The upgrade follows a period of underperformance and price correction in the stock, which the brokerage said has widened the valuation discount compared with its peers.
Valuation Discount Widens After Recent Underperformance
According to Kotak Institutional Equities, HDFC Bank’s overall business model and loan book remain broadly comparable with other large lenders. However, the brokerage noted that liability side constraints have led to a lower valuation multiple relative to peers.The brokerage said that at current levels, the downside risk appears limited. However, it also pointed out that stronger visibility on improvements in the bank’s liability franchise would be necessary for the stock to deliver sharp outperformance.
Margin Expansion Key for Potential Re Rating
The brokerage note highlighted that a re rating in HDFC Bank shares would require greater confidence in the expansion of net interest margins.Improvement in margins and liability strength could play a key role in driving future valuation upside.
Analyst Sentiment Remains Strong
Despite the recent decline in the stock price, analyst sentiment toward HDFC Bank remains overwhelmingly positive.Out of the 47 analysts tracking the stock, 45 have issued a Buy rating while two have a Hold recommendation.
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