1QFY2012 Result Review HDFC Bank :: Angel Broking,

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


1QFY2012 Result Review
HDFC Bank
For 1QFY2012, HDFC Bank clocked a healthy net profit growth of 33.7% yoy to `1,085cr
marginally above our estimates of `1,073cr. Lower provisions continued to aid the profit
growth for the bank with provisioning expenses declining by 20.1% yoy and came in
18.6% below our estimates. Adjusting for short term one-off wholesale loans in
1QFY2011, gross advances of the bank registered healthy growth of 29.1% yoy and 9.7%
qoq. Deposit accretion was moderate at 15.4% yoy (1.2% qoq). Pace of CASA deposits
accretion moderated further to 15.1% yoy, with growth in saving account deposits
continuing to decline (down from 40.0% as of 1QFY2011 to 20.3% as of 1QFY2012).
However CASA ratio continues to remain best-in-class at 49.1% (49.2% in 1QFY2011).
The bank was able to sustain its reported NIM at 4.2% sequentially despite the sharp rise in
cost of funds for the system as a whole. The bank had hiked its base rate quite aggressively
(average base rate for the bank stood at 9.0% in 1QFY2012 as compared to 8.0% in
4QFY2011). The bank delivered reasonable growth in other income in which fees and
commission income grew by 15.9% yoy (adjusted) and forex and derivative income which
rose by 33.9% yoy. Asset quality of the bank continued to be largely stable. Gross and net
NPAs sequentially rose by 8.2% and 7.5%, respectively. The gross and net NPA ratios
improved further to 1.0% and 0.2%, respectively. Provision coverage ratio (excluding
technical write-offs) remained healthy at 82.6%.
We expect the bank to deliver a healthy earnings CAGR of ~30% over FY2011-FY2013E
aided by sustained NIMs underpinned by the bank’s strong CASA deposit franchise and
healthy asset quality. However at the CMP the stock is fairly priced (at 3.5x FY2013E ABV),
in our view. Hence, we maintain our Neutral recommendation on the stock. We may revise
our estimates post interaction with the management.