Motilal Oswal sees strong upside as RBI eases restrictions

Domestic brokerage and research firm Motilal Oswal sees further upside on this positive developement. “HDFC Bank has underperformed and has been range bound over last couple of months owing to pressure on NII growth and margins. The lifting of these RBI restrictions thus addresses the key overhang. Further, we also expect growth trends to revive in retail especially in unsecured lending segment in coming quarters,” it said. The brokerage has maintained its ‘Buy’ rating on the HDFC Bank stock with a target price of ₹1,800 per share.

Motilal further said that the bank typically adopts an aggressive stance during the festive season and offers various discounts on consumer durable products to drive spends and accelerated growth in consumer durable financing. Therefore, lifting of RBI restrictions before the festive season augurs well and it expects the bank to turn more aggressive on credit cards over the next few months.

HDFC Bank is the largest credit card issuer in the country with a card base of 14.8 million as on June 2021. However, the bank has lost around 0.6 million cards since the embargo.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said that an important trigger for the market today would be the good news for HDFC Bank. “RBI’s decision to partially remove restrictions on credit card issuances by HDFC Bank would help this bluechip regain some of its lost shine. This would be favourable to Bank Nifty too which has been underperforming this year. But it is important to understand that partly the good news is already in the price since HDFC Bank is up by 6% this month, perhaps in anticipation of the positive development,” Vijayakumar added.