HDFC BANK: : BUY TARGET PRICE: RS.590 :: Kotak Securities PDF link

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

http://www.kotaksecurities.com/pdf/dmb/MorningInsight19042012.pdf

HDFC BANK
PRICE: RS.537 RECOMMENDATION: BUY
TARGET  PRICE: RS.590 FY13E P/E: 18.7X, P/ABV: 3.7X
Q4FY12: Core performance largely in line; CASA mix improved
70bps QoQ to 48.4%. NIM and asset quality remained healthy;
retain HDFC Bank as one of the preferred picks in the banking
space.
 Net interest income (NII) grew at healthy pace (19.3% YoY) mainly aided
by strong loan growth (22.2% YoY) and stable margin (YoY). Net profit
rose 30.4% YoY mainly on back of lower provisions & contingencies (decline of 30.8%) along with healthy NII and fee-income (23.7% YoY).
 CASA mix (adjusting for one-off) improved 70 bps (QoQ) to 48.4% at the
end of Q4FY12; NIM also improved QoQ by 10bps (stable QoQ) to 4.2%
during Q4FY12. Its healthy liability franchise has been aiding in delivering one of the best NIM in the industry.
 Slippage was contained at ~1.0% during FY12; asset quality remained
stable - gross and net NPAs stand at 1.0% and 0.2%, respectively. Its
lower stressed asset (gross NPA: 1.0%; Restructured book: 0.4%) is again
one of the best in the class.
 In our view, HDFC bank would continue to enjoy the valuation premium
vis-à-vis its peers on back of one of the best liability franchise which has
been aiding the bank to report healthy NIM. A lower credit cost on back
of robust asset quality is likely to support in delivering healthy return
ratios (FY13E- RoE: 20.9%, RoA: 1.7%). Hence, we maintain BUY on the
stock with TP of Rs.590 (earlier Rs.575) based on 4.0x of its FY13E ABV.