HDFC Bank Ltd. share price target

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,...

In Q1FY21 HDFC Bank's GNPA increased sequentially by 10bps to 1.36% with slippage ratio at 1.2%. 9% book under moratorium seems to be the lowest in the industry which needs to be watch out for asset quality pressures in H2FY21. Profitability impacted by contingent provisions (Rs.10bn) related to Covid-19 impact. PAT grew by 20% YoY due to lower effective tax rate (25.5% vs 35% YoY) as PBT grew by 5% YoY. NII grew modestly by 18% YoY against a loan growth of 21% YoY due to a decline in its margins. PPoP grew by 15% YoY as cost to income ratio improved (35% vs 39% YoY); fee income declined by 37% YoY as bank lost Rs.20bn on account of Covid-19. We believe that...

HDFC Bank (HDFCB) reported good performance in Q1FY21 amidst the ongoing Covid-19 macro unceratinity. Robust loan growth at 21%, steady NIMs at 4.3% and improved CI led improvement in PPOP, up 15% while almost flattish QoQ. On expected lines

19 July 2020 HDFC Bank (HDFCB) reported mixed trends in advances growth. While corporate growth was robust at ~38% YoY, retail loan growth declined sequentially. Operating performance remained steady, led by strong NII growth and tight control on opex. In contrast, fee income declined sharply due to the economic slowdown. However, higher treasury gains supported other income. Maintain HDFCB reported a steady quarter with PAT growth of ~20% YoY (-4% QoQ), supported by NII growth of 18% YoY (+3% QoQ) and controlled opex, which declined 3% YoY (-17% QoQ). The strong NII growth was led by advances, which increased 21% YoY and stable margins of 4.3% QoQ. Fee income declined 37% YoY, impacted by the slowdown in economic activity due to the COVID-19 outbreak. While the pandemic led to a decrease in fees/other income by ~INR20b, treasury gains were higher at INR10.9b (+92% QoQ).

About 9% of the bank's portfolio is under moratorium as of 30th June. The proportion is higherinRetail,SMEandBusinessBankingsegmentsandlowerinCorporatesegment.Of themoratoriumportfolio,regularcustomers(0dpdasof29thFeb)comprises97%andabout...

HDFCB reported a strong PAT of Rs66.6bn (PLe: Rs64.2bn) amidst COVID-19 lockdown uncertainty, which also prompted it to make additional Rs10bn as provisions leading to a Rs55.0bn of contingency+floating provisions cover. Operating performance was better with PPOP growth of 15% YoY despite losing momentum on core fee income streams to the tune of Rs20bn which was offset by 24% QoQ lower other opex. Bank will continue to build in higher provisioning ahead but prudent risk management gives us comfort on asset quality impact but we have yet to watch outcomes in 2HFY21 as moratorium...

HDFC Bank's (HDFCB) Q1FY21 PAT at ~Rs 67bn was driven by 18% YoY growth in NII and a decline in operating expenses.