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B u s i n e s s g r o w t h h e a l t h y , p r o f i t a b i l i t y r o b u s t …
HDFC Bank continued its streak of 30% YoY jump in PAT with Q2FY12 profit
up 31.5% YoY to | 1199 crore (I-Direct estimate: | 1185 crore). Deposits grew
a strong 9% QoQ, 18% YoY to | 230676 crore with a sharp rise in term
deposits of 12.6% QoQ leading to CASA declining 165 bps to 47.3%. The
loan book expanded 7.3% QoQ (25.6% YoY adjusted for outstanding short
term loans to telecom companies of | 7000 crore) to | 189917 crore. Higher
term deposit accretion pressurised margins that declined by 10 bps QoQ to
4.1%. Consequently, NII came in lower than expected at | 2944 crore. Asset
quality was stable with both GNPA & NNPA ratio flat QoQ at 1% & 0.2%,
respectively, and PCR (excluding write-offs) at 81%. We expect 20% CAGR in
business to support 19% CAGR in NII and 30% CAGR in PAT over FY11-13E.
ƒ Advances up 25.6% YoY (adjust.) spurred by retail loan rising 34% YoY
Loan book growth was healthy at 25.6% YoY adjusted for outstanding
short-term loans to telecom companies in Q1FY11 worth | 7000 crore
(paid back in Q3FY11). Retail loans grew 34% YoY with a sharp jump in
CV/CE segment of 63% YoY (25% QoQ), business banking, personal
loans and home loans (acquired portfolio worth | 1200 crore). We
expect well diversified growth in advances of 21% CAGR in FY11-13E.
ƒ NIM moderates to 4.1% due to higher term deposit mobilisation…
Deposit growth of 9% QoQ with 12.6% QoQ jump in term deposits and,
subsequently, lower CASA at 47.3% led to margins dipping 10 bps to
4.1%. Interestingly, income from investments was up 33% QoQ due to
higher yields and 7.8% QoQ rise in investments. We expect the pressure
on NIM to continue in H2FY12E and estimate CASA ratio of 48% and
NIM in the range of 4-4.1% for FY12E.
V a l u a t i o n
At the CMP of | 488, the bank is trading at 3.5x its FY13E ABV. We expect
retail driven growth in both loan book and liability franchise with NIM
protected at 4-4.1% in FY12E. Even though we see some stress on asset
quality, going forward, marginal accretion in NPL additions can be absorbed
by high provisions. Return ratios are expected to be healthy with RoA of
1.7%+ and RoE of 20%+ by FY13E. Therefore, we value the bank at 3.8x
FY13E ABV and maintain our target price at | 532.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
B u s i n e s s g r o w t h h e a l t h y , p r o f i t a b i l i t y r o b u s t …
HDFC Bank continued its streak of 30% YoY jump in PAT with Q2FY12 profit
up 31.5% YoY to | 1199 crore (I-Direct estimate: | 1185 crore). Deposits grew
a strong 9% QoQ, 18% YoY to | 230676 crore with a sharp rise in term
deposits of 12.6% QoQ leading to CASA declining 165 bps to 47.3%. The
loan book expanded 7.3% QoQ (25.6% YoY adjusted for outstanding short
term loans to telecom companies of | 7000 crore) to | 189917 crore. Higher
term deposit accretion pressurised margins that declined by 10 bps QoQ to
4.1%. Consequently, NII came in lower than expected at | 2944 crore. Asset
quality was stable with both GNPA & NNPA ratio flat QoQ at 1% & 0.2%,
respectively, and PCR (excluding write-offs) at 81%. We expect 20% CAGR in
business to support 19% CAGR in NII and 30% CAGR in PAT over FY11-13E.
ƒ Advances up 25.6% YoY (adjust.) spurred by retail loan rising 34% YoY
Loan book growth was healthy at 25.6% YoY adjusted for outstanding
short-term loans to telecom companies in Q1FY11 worth | 7000 crore
(paid back in Q3FY11). Retail loans grew 34% YoY with a sharp jump in
CV/CE segment of 63% YoY (25% QoQ), business banking, personal
loans and home loans (acquired portfolio worth | 1200 crore). We
expect well diversified growth in advances of 21% CAGR in FY11-13E.
ƒ NIM moderates to 4.1% due to higher term deposit mobilisation…
Deposit growth of 9% QoQ with 12.6% QoQ jump in term deposits and,
subsequently, lower CASA at 47.3% led to margins dipping 10 bps to
4.1%. Interestingly, income from investments was up 33% QoQ due to
higher yields and 7.8% QoQ rise in investments. We expect the pressure
on NIM to continue in H2FY12E and estimate CASA ratio of 48% and
NIM in the range of 4-4.1% for FY12E.
V a l u a t i o n
At the CMP of | 488, the bank is trading at 3.5x its FY13E ABV. We expect
retail driven growth in both loan book and liability franchise with NIM
protected at 4-4.1% in FY12E. Even though we see some stress on asset
quality, going forward, marginal accretion in NPL additions can be absorbed
by high provisions. Return ratios are expected to be healthy with RoA of
1.7%+ and RoE of 20%+ by FY13E. Therefore, we value the bank at 3.8x
FY13E ABV and maintain our target price at | 532.
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