HDFC Bank (HDFCB) has built an exceptional banking franchise, powered by flawless execution. It consistently challenges the status quo as reflected in its product and digital innovation and yet persistently adheres to the basics of banking with regard to underwriting standards. The bank has reported remarkable improvement in collection efficiency, to 97% of pre-COVID levels, and is well-placed to gain incremental market share on both the asset and liability fronts. The bank is seeing improving trends across key business verticals, with some segments like Credit Cards showing strong buoyancy. The Credit Cards segment grew...

Outlook and Valuation: HDFCB continued to report steady and in-line performance amid challenging environment.

HDFC Bank (HDFCB) reported a largely in-line performance in Q2FY21 with PPOP up 18/8% YoY/QoQ to Rs 37,035mn and PAT with similar growth rate of 18/12.8% YoY/QoQ to Rs 75,131mn. Loan book growth (~16%), strong treasury and continued costs controls (C-I at 36.8%) drove the operational performance.

HDFC Bank reported a commendable Q2FY21 with 18% YoY growth in operating profit and PAT.

Amid Covid-19 headwinds, HDFC Bank (HDFCB) continues to gain market share, visible from the banks business performance update for the quarter ended September 2020. Slowdown in growth from the previous run-rate of +20% was on expected lines.

Valuation and Risks: We favor HDFC Bank for its resilient asset quality, consistent performance acrosscycles, best-in-class cost-efficiency ratios and high capital base. We re-initiate coverage on HDFC Bank with BUY rating based on SOTP valuation of Rs. 1323, upside of 18%.

Despite reporting a mixed trend on assets quality and moderate operating performance in 1QFY21, the best in class franchise, comfortable liquidity position and adequate coverage place the bank in a sweet spot. The bank used algorithm to declare fresh slippages (Slippages ratio of 1.2%, which is higher than the expectation) along with moratorium book of 9% (lowest among peers). During the quarter it reported sequentially higher provisioning expenses (38.9bn v/s 37.8bn in 4QFY20). The contingent provision stood 1.1% of loan book, while we expect ~1% of book may come under...

4 August 2020 The RBI has approved the appointment of Mr Sashidhar Jagdishan as MD & CEO of the bank for a period of three years, effective from 27 Oct20. He was appointed as Business Head Finance in 1999 and later as Chief Financial Officer in 2008. He has diversified experience across various functions and is currently the Group Head of Finance, Human Resources, Legal & Secretarial, Administration, Infrastructure, Corporate Communications, Corporate Social Responsibility & the Strategic Change Agent of the Bank. Over the past 26 years, under the leadership of Mr Aditya Puri, HDFCB has grown to become the largest private bank in India, with systemic market share of ~9.8% in advances and 8.3% in deposits, and market capitalization at INR5.7t. HDFC Bank HDFCB has maintained a stable asset quality track record over the past two decades through rigorous risk management practices and following high-quality governance standards.

HDFC Bank was incorporated in August 1994. It provides corporate banking and custodial services and is also involved in treasury and capital markets. In addition, it offers project advisory services and capital market products,...

HDFC Bank is the next HDFC Bank; Top Pick In The Banking Sector HDFC Bank reported a robust 1QFY21 with NII and operating profit in line with our estimates. PAT was 3.1% below our expectation primarily on account of higher than expected provisions. Advances grew by 21% YoY and 1% QoQ, led by growth in the wholesale banking segment where we believe the bank has been gaining market share. Deposit accretion was also strong with an overall growth of 24.6% YoY and 3.7% QoQ. CASA ratio dipped to 40.1% compared to 42.2% in 4QFY20 on account of 1.5% decline QoQ versus a growth of 14.9% in 4QFY20. On the other hand, term deposits grew by 23.7% YoY and 5.5% QoQ. NIM (calc.) stood at 4.2%, within the guided range of 4-4.4%. On a sequential...