According to InCred Equities, HDFC Bank finds itself in a predicament with regards to deposit growth, as it currently has a low Liquidity Coverage Ratio (LCR) of 110%. This has led to speculation that if HDFC Bank were to raise its deposit rates, then ICICI Bank would also need to follow suit in order to remain competitive in the market.
“Nuvama strongly advocates for owning shares in ICICI Bank, citing it as a wise decision due to the current economic landscape in India. In contrast to other prominent banks that may experience occasional fluctuations in their quarterly reports, ICICI Bank is viewed as a more secure investment.”
OVERVIEW
Both HDFC Bank and ICICI Bank show comparable profit margins.
However, HDFC Bank is currently encountering issues with deposit growth and has a low Liquidity Coverage Ratio (LCR).
In contrast, industry experts are confident that ICICI Bank will weather any challenges and continue to generate steady profits.”
Banking specialists who closely monitor ICICI Bank and HDFC Bank tend to hold positive views about both establishments. Yet, certain brokerages exhibit a preference for ICICI Bank over HDFC Bank. Despite the apparent fairness in HDFC Bank’s valuation, a handful of analysts have raised concerns about potential uncertainties arising from potential mergers. In light of the current economic landscape in the country, some experts assert that ICICI Bank presents a more secure option.
HDFC Bank's Positive Attributes
“According to InCred Equities, there is word of possible challenges for HDFC Bank as they experience slowed deposit growth and their Liquidity Coverage Ratio sits at a concerning 110%. However, if HDFC Bank were to raise deposit rates, it could potentially impact other banks such as ICICI Bank as they strive to maintain their share in the market. Despite these challenges, HDFC Bank outshines its competitors when it comes to offering unsecured loans for retail, SME, and MSME clients thanks to its extensive branch network and expanded presence in rural and semi-urban regions.”
“After careful analysis, it is evident that HDFC Bank holds a stronger position compared to ICICI Bank in terms of growth and profitability. This is due to HDFC Bank’s wide reach and improved operating leverage, which contribute to its projected 26.1% Compound Annual Growth Rate (CAGR) in profit after tax (PAT) from FY23F to FY26F. In contrast, ICICI Bank is expected to have a lower CAGR of 15.9% during the same period.”
ICICI Bank's Positive Attributes
“Nuvama confidently supports ICICI Bank, stating that the bank has exhibited steady and comprehensive progress in the last two years. With a solid financial standing, impressive net interest margin (NIM), and abundant liquidity, ICICI Bank outshines expectations. Nuvama projects that in the fiscal year 2025, ICICI Bank’s loan growth will exceed that of HDFC Bank, and its Return on Assets (RoA) will remain superior to other prominent banks.”
Nuvama considers ICICI Bank to be a prime investment opportunity in an industry struggling with deposit constraints. They view the company as a necessary addition to any portfolio, as it provides the safest option in the Indian market with minimal quarterly fluctuations compared to other major banks. Despite currently trading at a premium of 10% to HDFC Bank, Nuvama confidently justifies this discrepancy by highlighting ICICI Bank’s superior earnings record.
TARGET PRICE
“Trendlyne reveals that ICICI Bank has an average target price of Rs. 1002 on downside and 1021.4 on upside, signaling a possible 18% growth.
while HDFC Bank boasts an average target price of Rs. 1467.58 on downside and 1487.28 on upside,indicating a potential 38% increase.
DISCLAIMER:Business Today provides stock market updates for informational purposes, it is crucial to bear in mind that this information is not meant to be construed as investment advice. It is highly recommended that readers consult a certified financial advisor for guidance before making any investment choices.”
