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Sell HDFC Bank; target Rs 471: Dolat Capital
Dolat Capital is bearish on HDFC Bank and has recommended sell rating on the stock with a target price of Rs 471 in its January 19, 2012 research report.
Dolat Capital is bearish on HDFC Bank and has recommended sell rating on the stock with a target price of Rs 471 in its January 19, 2012 research report.
"In Q3 FY12, HDFC Bank's (HDBK) NII grew 12.2% YoY to Rs 31bn - 2.5% higher than our estimates of Rs 30.4bn. The bank reported bottom-line of Rs 14.3bn compared to our estimates of Rs 14.2bn. Much higher term deposit mobilization and re-pricing of term deposits at higher rates reflected into higher cost of deposits. Though, HDBK was able to pass-on higher liabilities cost and maintain margin but by increasing exposure to high-yielding riskier retail credit segments and sharp rise in yield on investments."
"On non-interest income front, much higher foreign exchange income was due to higher volume from clients and due to volatility in FX rates. The bank's asset quality remains strong and the management does not expect any negative surprise going forward. Due to contained NPLs, bad-debt provisions fell marginally."
"We maintain our FY12 and FY13 earning estimates and cut our stock rating to Sell from previous Accumulate rating mainly due to recent surge in stock price. We maintain the stock's target price at Rs 471 at 3.3x adjusted book value FY13. At current price, the stock quotes at 3.4x adjusted book value FY13 respectively," says Dolat Capital research report.
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