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India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Consistency at its best
CHANGE
Initiate coverage at BUY with a target price of INR519
We beli eve HDFC Bank will remain the most expensive and least risky
bank we cover with steady earnings trajectory. FY11 trend suggests that
HDFC Bank’s retail portfolio is in a sweet spot, it has low exposure to
infrastructure, it will achieve above-industry loan growth (FY12-13E) with
stable to marginal decline in margins, and has decent earnings visibility.
CATALYST
Best stock to hide in times of uncertainty and risk aversion
If concerns about infrastructure continue to haunt the banking sector due
to high interest rates and policy paralysis, and given the heightened risk
aversion due to global recession fears and Euro debt problems, we believe
HDFC Bank could continue to outperform the sector, especially if
investors remain risk averse.
VALUATION
Good for investors keen to avoid infrastructure risk
HDFC Bank trades at 3.1x FY13E P/ABV (with average ROE of 20.4% over
FY11-13E), which is in line with its long-term average multiple. Downside
risk to TP and estimates are higher-than-expected slippage in retail
loans. We expect the stock’s premium valuation to be sustained due to its
profitable growth and low exposure to infrastructure.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Consistency at its best
CHANGE
Initiate coverage at BUY with a target price of INR519
We beli eve HDFC Bank will remain the most expensive and least risky
bank we cover with steady earnings trajectory. FY11 trend suggests that
HDFC Bank’s retail portfolio is in a sweet spot, it has low exposure to
infrastructure, it will achieve above-industry loan growth (FY12-13E) with
stable to marginal decline in margins, and has decent earnings visibility.
CATALYST
Best stock to hide in times of uncertainty and risk aversion
If concerns about infrastructure continue to haunt the banking sector due
to high interest rates and policy paralysis, and given the heightened risk
aversion due to global recession fears and Euro debt problems, we believe
HDFC Bank could continue to outperform the sector, especially if
investors remain risk averse.
VALUATION
Good for investors keen to avoid infrastructure risk
HDFC Bank trades at 3.1x FY13E P/ABV (with average ROE of 20.4% over
FY11-13E), which is in line with its long-term average multiple. Downside
risk to TP and estimates are higher-than-expected slippage in retail
loans. We expect the stock’s premium valuation to be sustained due to its
profitable growth and low exposure to infrastructure.
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