Buy HDFC Bank; target of Rs 724: Firstcall Research

Firstcall Research is bullish on HDFC Bank and has recommended buy rating on the stock with a target of Rs 724 in its January 19, 2013 research report.

“The Housing Development Finance Corporation Ltd. (HDFC) was amongst the first to receive an ‘in principle’ approval from the RBI to set up a bank in the private sector, as part of the RBI’s liberalisation of the Indian Banking Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of “HDFC Bank Ltd with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. The bank has a network of 2,620 branches and 10,316 ATMs in 1,454 cities as on June 30, 2012.”

“The company’s net profit jumps to Rs. 18590.70 million against Rs. 14296.60 million in the corresponding quarter ending of previous year, an increase of 30.04%. Revenue for the quarter rose 20.89% to Rs. 87076.20 million from Rs. 72026.40 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 7.85 a share during the quarter, registering 74.29% a decrease over previous year period. Net Interest Income is Rs. 55977.40 millions as against Rs. 45359.90 millions in the corresponding period of the previous year.”

“At the current market price of Rs.659.00, the stock P/E ratio is at 23.17 x FY13E and 19.11 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs. 28.45 and Rs.34.48 respectively.  Net Sales and PAT of the company are expected to grow at a CAGR of 27% and 28% over 2011 to 2014E respectively. On the basis of Debt-Equity Ratio, the stock trades at 4.35 x for FY13E and 4.09 x for FY14E. Price to Book Value of the stock is expected to be at 4.26 x and 3.48 x for FY13E and FY14E respectively. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘buy’ in this particular scrip with a target price of Rs. 724  for medium to long term investment,” says Firstcall Research report.

Public holding more than 90% in Indian cos

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