Hold HDFC Bank; buy Development Credit Bank: AnandRathi
AnandRathi has recommended hold rating on HDFC Bank and buy rating on Development Credit Bank (DCB Bank) with a target price of Rs 725 and Rs 58 respectively in its research reports dated July 18, 2013.
July 20, 2013 / 14:56 IST
AnandRathi's research report on HDFC Bank & Development Credit Bank (DCB)
HDFC Bank - Robust core earnings, well-capitalised; Hold. At 21.2 percent yoy, HDFC Bank's advances grew faster than its deposits at 17.8 percent yoy. The robust credit growth was largely driven by the retail segment (25.5 percent yoy). Strong credit growth, healthy fees and robust asset quality are likely to drive a 28 percent earnings CAGR over FY13-16. We like the bank for its strong fundamentals and consistent profit growth over the past five years. Nevertheless, as the stock trades at 3.7x FY14e PABV, it appears fairly valued. Hence, we maintain our Hold rating on the stock with a target price of Rs 725.DCB Bank - Slower business growth, but better NIM and productivity; Buy. While DCB Bank's deposits grew 21.8 percent yoy, its advances grew 18.8 percent yoy, resulting in 20.5 percent yoy business growth, slower than the 24.7 percent past four-quarter average. We maintain our Buy rating, as we expect the bank's improving business growth, better productivity and stable credit costs to support robust profitability over FY14-16. At our Mar'14 price target, the stock would trade at a PBV of 1.3x FY14e and 1.1x FY15e. Our target price is based on the two-stage DDM. Buy the stock with a target price of Rs 58.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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