HDFC Bank has posted robust set of numbers in Q4 with a 20.6 percent rise in net profit and an improvement in asset quality. In an interview to CNBC-TV18, Vaibhav Agrawal of Angel Broking and Jignesh Shial of IDBI Capital analyse the company's result and their outlook on the stock.
Below is the transcript of Vaibhav Agrawal and Jignesh Shial’s interview with Menaka Doshi and Anuj Singhal on CNBC-TV18.
Menaka: All other numbers looking like they meet expectations. The only sticky point as we have been talking about could be the provisioning number?
Agrawal: All the line items are bang in line with expectations. Even on the provisioning front we were expecting around Rs 585 crore itself. We were looking at the run-rate in the previous quarters as well. The year ago quarter, the base was a little bit lower. But the run-rate that they are on an average doing is around Rs 550-560 crore kind of run-rate. And considering that net and gross non-performing assets (NPA) in absolute terms are lower quarter-on-quarter (Q-o-Q), this is a good set of numbers even on asset quality as well as on the operating front.
Shial: Numbers are almost in line with what the expectations had been. So, even the advance and deposit growth also seems pretty okay. So, nothing surprising. We are happy with the numbers.
Menaka: So, how would you rate this slightly higher provisioning number, just to give us a sense of where you think we are in the asset deterioration/asset improvement cycle?
Agrawal: For HDFC Bank, the only part of their portfolio which was giving them a little bit higher stress was the CB and business banking. Other than that actually, the Q3 commentary was that compared to earlier quarters the stress level has been stabilising and these numbers broadly reflect that stable Q-o-Q kind of performance. So, for HDFC specifically broadly asset quality looks pretty stable, although for the rest of the sectors we may see stress. But these numbers for HDFC are in line with what the management has been talking about.
Menaka: What would your outlook on the stock be given that you have seen most of the headline numbers?
Shial: We always had been positive on the stock. We always believed that they would be able to gain the momentum once the economic turnaround happens. So, that is what it seems like. With credit growth of 21 percent and in line numbers on the revenue front as well as on the profitability we think they would be able to gain market share further in the coming periods when the economy turns around.
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