Apr 25, 2013, 03.41 PM | Source: Moneycontrol.com
Dolat Capital is bullish on HDFC Bank and has recommended accumulate rating on the stock with a target of Rs 720 in its April 23, 2013 research report.
, Dolat Capital |
“HDFC Bank continued its superior performance with stable asset quality and remaining best in class in terms of core parameters of consistent earnings growth; asset quality, high NIM, CASA and high investor return ratios. The bank’s 30 percent YoY growth in net profit was driven mainly by the 21 percent growth in net interest income and reduction in provisions. Improvement in NIM (10bps YoY and 20bps QoQ) aided the NII growth while moderation in delinquency during quarter aided the reduction in the provisions.”
“FY13 delinquency ratio at 77bps did not see any deterioration and remains one of the best in industry. Coverage ratio of 80 percent has remained stable over the past 10 quarters and we expect the bank to maintain it at current levels for the next two years as well. Loan and deposit growth remained strong while the CASA ratio improved meaningfully QoQ to 47.4 percent, driven primarily by the increase in the savings deposit balances. We believe that the balance sheet growth should improve going forward as the corporate loan growth improves, though the retail loans should remain the main growth driver.”
“We believe the bank should be able to maintain the 22-25 percent balance sheet growth over the next two years with stable NIM and asset quality. We believe that the bank should continue to deliver average ROE of 22 percent and command premium valuations as it maintains its growth and asset quality, despite the competition and macro challenges. While we remain positive on the stock, current valuations at 3.8x on FY14 BVPS forecasts do not provide for meaningful upside. Maintain our Accumulate rating on the stock with target price of Rs 720, based on PBR of 4x on our FY14 BVPS forecasts,” says Dolat Capital research report.
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