12 Mar , 2022 By : Kanchan Joshi
Despite geopolitical uncertainty and high volatility, fundamentals of the listed companies have remained unchanged and hence positional investors are looking for value pick amid selloff caused by Russia-Ukraine war. For such investors, ICICI Securities has picked private banking giant HDFC Bank shares. As per the ICICI Securities research report, HDFC Bank share price may go up to Rs1955 apiece levels in long term, yielding around 40 per cent to its shareholders.
Discounting geopolitical uncertainty caused by Russia-Ukraine conflict, ICICI Securities said, "The bank is continuously assessing the situation amidst geopolitical uncertainties and performing scenario analysis to gauge the impact. Real economic growth may be adversely impacted by 50 to 100 bps but nominal growth due to higher inflation will be unaffected and unlikely to adversely affect credit growth."
The brokerage went on to add that rise in oil prices, commodity prices and exchange rate volatility creates macro volatility and it is difficult to gauge at this juncture the second-order or third-order derivative impact of the same on growth or asset quality.
"Directly, there does not seem to be any impact on the bank’s loans and advances portfolio due to prevailing geopolitical tensions. There is no direct exposure to the involved countries, nor are any of the large corporate customers directly impacted," ICICI Securities report said.
Pointing towards benefits of Future Ready project of HDFC Bank, the research report said, "Bank’s strategic and execution focus to effectively implement project Future Ready will start yielding results particularly in the following domains: 1) Newly identified growth engines of MSME and rural banking, 2) digital marketing as another key delivery channel, 3) expanding presence in semi-urban and rural markets, 4) creating a new digital factory to foster innovation, and 5) putting in place the right talent and further strengthening its core functions to drive the project."
Giving buy tag to HDFC Bank shares; ICICI Securities report said, "It currently trades at a multiple of less than 3 for FY23E, its book value stands at a discount to 5-year average valuation. Maintain BUY with unchanged target price of Rs1,955."
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