HDFC Bank has been downgraded by research house Nomura in its latest research report. Researchers at Nomura have given four negative factors for the reason behind HDFC Bank downgrade. Nomura has downgraded HDFC Bank stock from BUY to Neutral. The price target has been reduced from Rs 1970 to Rs 1800.

HDFC Bank has witnessed a strong performance over the last few months as the management merged HDFC Bank and HDFC into a single entity, creating the largest private lender in India. HDFC Bank remains with strong fundamentals for long term investors but Nomura research report has given four reasons for downgrade.

Nomura has reduced estimated Net interest margin (NIM) for HDFC Bank due to excess liquidity and accounting adjustments. As per the research report, pressure on Net Interest Margin could continue for 2-3 quarters.

Nomura is expecting a cost-to-income ratio of 40 percent for HDFC Bank for the financial year 2024 compared to 38 percent earlier, and maintaining its 39 percent to 40 percent projection over the financial year 2025-2026.

Nomura report has also considered higher NPAs at HDFC Bank as a reason for downgrade.

The report also cited 4 percent negative impact of book value of HDFC Bank after the merger. For 2024-2026, Nomura has reduced EPS expectations from HDFC Bank by 5-7 percent.

ICICI Direct has suggested BUY Call for HDFC Bank in August 4 research report with target price of Rs 2050.

Geojit BNP Paribas has suggested BUY Call for the stock with target price of Rs 1964.

KRChoksey has suggested target price of Rs 2060 for the stock.

HDFC Bank stock closed almost two percent lower on Monday at Rs 1630. We can expect further weakness in the stock in today’s session.

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