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Result Reviews
HDFC Bank
For 2QFY2012, HDFC Bank reported healthy 31.5% yoy growth in its net
profit to `1,199cr, in line with our as well as street estimates. Moderate NIM
compression coupled with largely steady asset quality was the key highlight of
the results.
Another quarter of steady performance: Adjusting for the short-term one-off
wholesale loans, gross advances growth moderated a bit to 25.6% yoy.
Deposits accretion picked up a bit to 18.1% yoy, primarily driven by rise in
fixed deposits. The bank’s CASA ratio remains amongst the best in the industry
at 47.3% (49.1% in 1QFY2012) despite the recent moderation in the pace of
growth. Due to the sharp rise in FD rates over the past one year, CASA
deposits growth moderated considerably to 10.3% yoy. The bank was able to
restrict the reported NIM compression to a marginal 10bp qoq at 4.1% due to
its relatively aggressive hike in lending rates. Asset quality remained largely
healthy with gross and net NPA ratios remaining stable at 1.0% and 0.2%,
respectively. Slippages stood at ~1.0% compared to 0.9% in 1QFY2012 and
0.8% in FY2011. NPA coverage excluding technical write-offs also remained
healthy at 81.3% (82.6% in 1QFY2012). The bank made `240cr of floating
and general provisions during 2QFY2012. Branch expansion continued the
traction, with opening of 164 branches in 1HFY2012 to take the network to
2,150 branches.
We believe HDFC Bank is well positioned for high qualitative growth, with
CASA and cost-to-income ratio returning to pre-CBoP levels. In our view, with
strong capital adequacy and healthy branch expansion, the bank is set to
further gain credit and CASA market share. However, given the current
valuations at 3.3x FY2013E ABV, we believe the positives are largely factored
in the price and the upside is likely to be limited from current levels. Hence, we
maintain our Accumulate recommendation on the stock with a target price of
`519, implying an upside of 5.3% from current levels.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Result Reviews
HDFC Bank
For 2QFY2012, HDFC Bank reported healthy 31.5% yoy growth in its net
profit to `1,199cr, in line with our as well as street estimates. Moderate NIM
compression coupled with largely steady asset quality was the key highlight of
the results.
Another quarter of steady performance: Adjusting for the short-term one-off
wholesale loans, gross advances growth moderated a bit to 25.6% yoy.
Deposits accretion picked up a bit to 18.1% yoy, primarily driven by rise in
fixed deposits. The bank’s CASA ratio remains amongst the best in the industry
at 47.3% (49.1% in 1QFY2012) despite the recent moderation in the pace of
growth. Due to the sharp rise in FD rates over the past one year, CASA
deposits growth moderated considerably to 10.3% yoy. The bank was able to
restrict the reported NIM compression to a marginal 10bp qoq at 4.1% due to
its relatively aggressive hike in lending rates. Asset quality remained largely
healthy with gross and net NPA ratios remaining stable at 1.0% and 0.2%,
respectively. Slippages stood at ~1.0% compared to 0.9% in 1QFY2012 and
0.8% in FY2011. NPA coverage excluding technical write-offs also remained
healthy at 81.3% (82.6% in 1QFY2012). The bank made `240cr of floating
and general provisions during 2QFY2012. Branch expansion continued the
traction, with opening of 164 branches in 1HFY2012 to take the network to
2,150 branches.
We believe HDFC Bank is well positioned for high qualitative growth, with
CASA and cost-to-income ratio returning to pre-CBoP levels. In our view, with
strong capital adequacy and healthy branch expansion, the bank is set to
further gain credit and CASA market share. However, given the current
valuations at 3.3x FY2013E ABV, we believe the positives are largely factored
in the price and the upside is likely to be limited from current levels. Hence, we
maintain our Accumulate recommendation on the stock with a target price of
`519, implying an upside of 5.3% from current levels.
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