Accumulate HDFC Bank; target Rs 720: Dolat Capital
Dolat Capital is bullish on HDFC Bank and has recommended 'Accumulate' rating on the stock with a price target of Rs 720 in its June 21, 2013 research report.
June 24, 2013 / 12:59 IST
Dolat Capital's research report on HDFC Bank
"HDFC Bank should continue deliver stable operating performance with stable asset quality and NIM. Some of the newer areas of business like gold loans is also doing well and should continue seeing higher than average growth with low defaults. Loan growth should be maintained at 5 percent above the industry average; driven by working capital & short term loans, business banking, mortgage and personal loans. While the bank has witnessed some off-take in the project loan segment, given the current economic scenario, loan demand continues to be largely working capital focused.""Delinquency rates are likely to remain at FY13 levels of 1 percent. The bank's exposure is well spread across different sectors; and sectors which are generally facing higher degree of stress, like power, iron/steel, textiles, gems/jewellery form around 7 percent of total loans. Even within these sectors the bank does not see any major stress. Some segments in auto loans and CV portfolio remain on the bank's watch list where there could some stress though not very significant to dent the overall asset quality.""Valuation: We believe the bank should be able to maintain the 22-25 percent balance sheet growth over the next two years with stable NIM and asset quality. We believe that the bank should continue to deliver average ROE of 22 percent and command premium valuations as it maintains its growth and asset quality, despite the competition and macro challenges. Stock price has corrected by more than 10 percent during the past month with PBR valuation at 3.5x FY14 BVPS. We maintain our Accumulate rating on the stock with target price of Rs 720, based on PBR of 4x on our FY14 BVPS forecasts," says Dolat Capital research report.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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