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A s t o n i s h i n g c o n s i s t e n c y …
HDFC Bank reported yet another quarter of 30%+ PAT growth at | 1085
crore. NII of | 2848 crore and non interest income of | 1120 crore was in
line with our estimates. We maintain our estimate of 18% CAGR in total
assets, which will support 20% CAGR in NII and 31% in PAT to | 6731
crore over FY11-13E.
ƒ NIM maintained at 4.2%, high C/D ratio and Tier II fund raising
The bank reported CASA deposits of 49% for Q1FY12. It raised | 3650
crore of Tier II capital by issuing Tier II bonds. Adjusted for one-off (3G
loans), loan book grew by 29% (without adjustments 20% YoY) to |
1,76,964 crore. Deposits growth was lower at 16% YoY to | 2,11,510
crore, due to running of current deposits, which spooked up in Q4FY12.
C/D ratio at 84% remained high supported by strong CAR of 17% (Tier I
@11.4%). This helped the bank to maintain NIM of 4.2% (unchanged
QoQ) despite a 50 bps hike in saving deposits rate. Also, ~50 bps hike
in base rate during the quarter kept yields on advances higher QoQ.
ƒ Asset quality provides comfort
Asset quality remains healthy with GNPA@1% (| 1833 crore vs. | 1791
crore in Q1FY11) against 1.2% in Q1FY11. NNPA stood at 0.2%, down
from 0.3% during the same time. PCR (not including write-offs, technical
or otherwise) stood at 83% for Q1FY12. Total restructured loans were at
0.4% of advances, of which 0.1% has already slipped into NNPA. We
expect the NPL situation to remain at current levels ahead as well.
Marginal accretion in NPL additions can be absorbed by high provisions.
The bank has also maintained floating provision of | 250 crore.
ƒ Gaining size and reach
The total assets of the bank grew by 22% YoY to | 285942 crore during
Q1FY12. The bank added 125 branches in Q1FY12, taking the network to
2,111 branches and 5,998 ATMs. Despite aggressive growth in
distribution platform, cost ratio was stable at 48%. The bank aims to add
another 200 branches in FY12E. This should enable it to build a strong
liability franchise and bring traction in third-party distribution.
V a l u a t i o n
At the CMP of | 511, the bank is trading at 3.6x ABV and 18x EPS for
FY13E. We have increased our target multiple marginally due to positive
surprise on the NIM front and arrived at a fair value of | 532
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
A s t o n i s h i n g c o n s i s t e n c y …
HDFC Bank reported yet another quarter of 30%+ PAT growth at | 1085
crore. NII of | 2848 crore and non interest income of | 1120 crore was in
line with our estimates. We maintain our estimate of 18% CAGR in total
assets, which will support 20% CAGR in NII and 31% in PAT to | 6731
crore over FY11-13E.
ƒ NIM maintained at 4.2%, high C/D ratio and Tier II fund raising
The bank reported CASA deposits of 49% for Q1FY12. It raised | 3650
crore of Tier II capital by issuing Tier II bonds. Adjusted for one-off (3G
loans), loan book grew by 29% (without adjustments 20% YoY) to |
1,76,964 crore. Deposits growth was lower at 16% YoY to | 2,11,510
crore, due to running of current deposits, which spooked up in Q4FY12.
C/D ratio at 84% remained high supported by strong CAR of 17% (Tier I
@11.4%). This helped the bank to maintain NIM of 4.2% (unchanged
QoQ) despite a 50 bps hike in saving deposits rate. Also, ~50 bps hike
in base rate during the quarter kept yields on advances higher QoQ.
ƒ Asset quality provides comfort
Asset quality remains healthy with GNPA@1% (| 1833 crore vs. | 1791
crore in Q1FY11) against 1.2% in Q1FY11. NNPA stood at 0.2%, down
from 0.3% during the same time. PCR (not including write-offs, technical
or otherwise) stood at 83% for Q1FY12. Total restructured loans were at
0.4% of advances, of which 0.1% has already slipped into NNPA. We
expect the NPL situation to remain at current levels ahead as well.
Marginal accretion in NPL additions can be absorbed by high provisions.
The bank has also maintained floating provision of | 250 crore.
ƒ Gaining size and reach
The total assets of the bank grew by 22% YoY to | 285942 crore during
Q1FY12. The bank added 125 branches in Q1FY12, taking the network to
2,111 branches and 5,998 ATMs. Despite aggressive growth in
distribution platform, cost ratio was stable at 48%. The bank aims to add
another 200 branches in FY12E. This should enable it to build a strong
liability franchise and bring traction in third-party distribution.
V a l u a t i o n
At the CMP of | 511, the bank is trading at 3.6x ABV and 18x EPS for
FY13E. We have increased our target multiple marginally due to positive
surprise on the NIM front and arrived at a fair value of | 532
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