Buy HDFC Bank; target of Rs 520: FIFL

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Buy HDFC Bank; target of Rs 520: FIFL

Fortune Interfinance (FIFL) is bullish on HDFC Bank and has recommended buy rating on the stock with a target of Rs 520 in its January 19, 2012 research report.

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Fortune Interfinance (FIFL) is bullish on HDFC Bank and has recommended buy rating on the stock with a target of Rs 520 in its January 19, 2012 research report.

"HDFC Bank (standalone) maintained the strong growth momentum in bottom line in 3QFY12 and recorded 31% yoy and 19% qoq surge in bottom-line. Healthy growth in NII and other income coupled with the decline in loan loss provisioning expenses aided the robust growth in bottom-line. Business mix for the quarter remained above the industry average as credit and deposit increased 21.3% and 21% yoy respectively, as compared to industry growth of 15.9% and 16.9%, respectively. Overall asset quality remained stable with the gross and net NPA ratios at ~1% and 0.2% levels, respectively. CASA ratio further improved to 49.4% providing cushion to margins (NIM's), which stood at stable 4.10% levels."

"HDFC Bank (standalone) maintained the strong growth momentum in bottom line in 3QFY12 and recorded 31% yoy and 19% qoq surge in bottom-line. Healthy growth in NII and other income coupled with the decline in loan loss provisioning expenses aided the robust growth in bottom-line. Business mix for the quarter remained above the industry average as credit and deposit increased 21.3% and 21% yoy respectively, as compared to industry growth of 15.9% and 16.9%, respectively. Overall asset quality remained stable with the gross and net NPA ratios at ~1% and 0.2% levels, respectively. CASA ratio further improved to 49.4% providing cushion to margins (NIM's), which stood at stable 4.10% levels. For the 9MFY12 period, the bank's retail loan Portfolio moved up 24.4% ytd and 7.3% qoq and surpassed industry growth of ~5.1% ytd and ~1.8% qoq. This saw the bank registering a sharp spike in its retail loan market share to ~13.8% in 3QFY12 v/s 11.7% in March 2011. Incremental market share in retail loans touched a whopping 55.5% for the 9MFY12 period compared to 6.8% in FY11."

"HDFC Bank continues to deliver consistent performance in bottom-line supported by best-in-class asset quality. ALM management of the bank suggests strong growth in operating income in FY13. We at FIFL believe that at the CMP, the stock is trading at 3.21x FY13E P/BV. We recommend Buy, with a revised Target Price of Rs 520 (earlier Rs 475), based on 3.45x FY13E P/BV, implying 7% upside from current levels," says Fortune Interfinace research report.      

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To read the full report click on the attachment