Angel Broking neutral on HDFC Bank

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Angel Broking neutral on HDFC Bank

Angel Broking has maintained neutral rating on HDFC Bank in its January 19, 2012 research report.

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Angel Broking has maintained neutral rating on HDFC Bank in its January 19, 2012 research report.

"HDFC Bank reported healthy 31.4% yoy growth in net profit to Rs 1,430cr, inline with our as well as street estimates. Steady NIMs coupled with largely stable asset quality was the key highlight of the results. The bank's net advances growth slowed down to 3.1% qoq, while deposit buildup was also lower, growing by a marginal 0.8% qoq. (On a yoy basis, both advances and deposits grew by 22.1% and 21.0%, respectively). Corporate loans for the bank grew at modest pace of 15.0% yoy, however retail loan book growth was strong at 29.5% yoy despite the rise in interest rates over the last one year. Yoy growth in retail loans was driven by CV, Business banking, Personal loans and Credit card business. In fact on a qoq basis, the corporate book shrank by 1.7% qoq, while retail book grew by 8.0% qoq. The bank ran down Rs 5000-6000cr of high cost wholesale deposits during 3QFY2012 which along with traction in retail business helped the bank maintain NIMs (4.1%) on a sequential basis. The pace of CASA deposits accretion for the bank was moderate in 3QFY2012 with a growth of 14.3% yoy. Other income growth for the bank was healthy at 25.9% yoy, primarily due to pick up in forex income / derivatives income (68.6% yoy). Fee income growth was also healthy at 19.6% yoy. The bank witnessed a treasury loss of Rs 82cr during 3QFY2012 on account of MTM losses on bond investments and investments in MFs. The bank maintained its strong asset quality track record during 3QFY2012 as well. Gross and Net NPA ratios remained stable at 1.0% and 0.2%, respectively."

"HDFC Bank is trading at 3.3x FY2013 ABV, which is only slightly lower than its median of 3.45x (over FY2005-FY2011), even as the rest of the banks are trading close to the bottom of their valuation range. We believe current valuations largely factor in the positives, leaving limited upside in the stock. Hence, we maintain our Neutral recommendation on the stock," says Angel Broking research report.

Institutional holding more than 40% in Indian cos

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To read the full report click on the attachment