Accumulate HDFC Bank; target Rs 752: Angel Broking
Brokerage house Angel Broking is bullish on HDFC Bank and has recommended 'Accumulate' rating on the stock with a price target of Rs 752 in its research report dated July 17, 2013.
July 19, 2013 / 12:41 IST
Angel Broking's report on HDFC Bank
"HDFC Bank delivered yet another quarter of consistent performance on the bottom-line front, with a growth of 30.1 percent yoy. On the operating front, NII growth came in healthy at 21.0 percent yoy, while non-interest income grew by 16.7 percent, leading to a healthy growth of 19.7 percent yoy in operating income and 23.6 percent yoy in preprovisioning profit. On the asset quality front, absolute Gross and Net NPA levels, increased sequentially by around 16 percent and 47 percent qoq, respectively. On back of 9.4 percent yoy lower provisioning, the bank was able to record a 30.1 percent yoy earnings growth.""The bank registered a robust growth in its balance sheet, with advances growing by 21.2 percent yoy, largely aided by robust traction in its retail loan portfolio (up 25.5 percent yoy and 3.0 percent qoq). Overall, the share of retail advances to overall loan book increased by around 200bp yoy to 54.3 percent. Within the retail loan portfolio, a strong buildup was witnessed in Personal loans; while Business Banking, Auto loans and CVCE registered a healthy growth of 22.1 percent 17.4 percent and 16.7 percent yoy, respectively. On the liabilities front, the deposit growth was healthy at 17.8 percent yoy. While, the current deposits accretion was moderate at 10.5 percent yoy, savings deposits grew by a healthy 16.7 percent yoy. CASA ratio declined by around 127bp yoy to 44.7 percent.""NIM for the bank remained flat sequentially at 4.6 percent. The non-interest income (excluding treasury) for the bank grew at a moderate pace of 9.1 percent yoy, as fee income growth came in moderate at 11.7 percent yoy and income from others increased by 8.2 percent yoy. The bank reported treasury gains of Rs 200cr for the quarter compared to Rs 67cr in 1QFY2013. On the asset quality front, the Gross NPA ratio for the bank remained flat at 1.0 percent sequentially, while the Net NPA ratio increased by 10bp sequentially to 0.3 percent. PCR (excluding write-offs) for the bank declined sequentially by 525bp to 74.7 percent."Outlook and valuation: "Given the challenging macro-economic developments, we believe within the banking sector, defensive stocks like HDFC Bank are likely to outperform rest of the banking sector, going forward. Also, with minimal NPA issues over the past couple of years, unlike other banks, the bank has had substantial management bandwidth to continue laying the building blocks for organic growth and market share gains. This should place it better than peers from a relative growth stand-point as well. At CMP, it is trading at a one-year forward P/ABV of 3.6x (3.1x FY2015E ABV). We recommend an Accumulate rating on the stock, with a target price of Rs 752," says Angel Broking 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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