Motilal Oswal has come out with its fourth quarter (January-March) earnings estimates for the banking sector. The brokerage house expects HDFC Bank to report a 0.3 percent growth quarter-on-quarter (growth of 20.4 percent year-on-year) in net profit at Rs 2801.7 crore.
Net interest income is expected to increase by 5.5 percent Q-o-Q (up 21.4 percent Y-o-Y) to Rs 6012.7 crore, according to Motilal Oswal.
Motilal Oswal's Report on HDFC Bank:
Loan growth is expected to be healthy at 20 percent YoY aided by improvement in growth for some retail products and continued momentum in corporate loans.
Fee income growth will continue to lag loan growth in the near term and expected to grow 15 percent YoY. Retail fees are expected to be healthy led by strong traction in third party distribution income.
Cal. NIM is expected to be stable QoQ at 4.8 percent aided by healthy CASA growth, fall in cost of deposits and partial benefit of capital raising.
Strong operating performance coupled with healthy asset quality would lead to 20 percent YoY earnings growth.
HDFCB trades at 3.1x FY17E BV and 16.5x FY17E EPS. Comfort on earnings (23%+ CAGR) remains high.
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