HDFC Bank - Q1FY12 Result Update ::Unicon

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HDFC Bank Q1FY12 Result Highlights

Ø  HDFC Bank (HDFCB) delivered another strong quarter growth, with net profit increasing by 33.7% to INR 10.8 Bn YoY. This was supported by strong loan growth of 29.1% YoY to INR 1.76 Tn. Deposits grew 15.4% YoY to INR 2.11 Tn, while the CASA ratio stood at 49.1%.

Ø  In Q1FY12 net interest income grew by 18.6% YoY to INR 28.48 Bn supporting core net interest margins (NIMs) which were stable at 4.2% on account of increasing advances and stable CASA. Going forward, margins are likely to remain stable within the range 3.9% to 4.3%.

Outlook & Valuation

Going forward, HDFC Bank is expected to keep ~24% of credit growth & also expected to maintain the CASA ratio at ~50%. On the back of continuous growth momentum, strong business & credit growth, improvement in asset quality & strong capital adequacy, HDFC bank commands a premium in its valuations. At the CMP stock trades at 4.1x its FY12E book value. We have HOLD rating on the stock for a target price of INR 520.