Buy HDFC Bank; target of Rs 1997: KR Choksey

KR Choksey's research report on HDFC Bank

NII grew to INR 1,88,727 Mn from INR 1,71,202 Mn in Q4FY22. The Core NIMs were stable at 4.0% in Q4FY22. PPoP grew 5.3% YoY at INR 1,63,570 Mn. Other income excluding trading income grew 10.6% YoY in Q4FY22. Provisions for Q4FY22 were at INR 33,124 Mn, including loan loss provisions of INR 17,782 Mn. Total provision for the quarter includes contingent provisions of INR 10,000 Mn. The credit cost for Q4FY22 stood at 0.96% vs 0.94% in Q3FY22 and 1.64% in Q4FY21. The GNPA were 1.17% in Q4FY22 vs a comparable 1.26% in Q3FY22. Total provisions were 182% of the gross NPA and NNPA for the quarter stood at 0.32% of the net advances. Net Profit stood at INR 1,00,552 Mn, an increase of 22.8% YoY on the back of lower provisions than a year-ago period. Advances as of 31st March 2022 were reported at INR 1,36,88,209 Mn with a 20.8% growth YoY. The total deposits stood at INR 1,55,92,174 Mn, a growth of 16.8% YoY as of 31st March 2022. The capital adequacy stood at 18.9% as of 31st March 2022.

Outlook

We maintain our target price at INR 1,997 per share, implying a P/ABV of 3.7x P/ABV to adj. book value of INR 538.7 per share, showing an upside of 43.1% over the CMP. Accordingly, we reiterate our BUY rating on HDFC Bank Ltd.