HDFC Bank Ltd. share price target

18 January 2020 HDFCB reported core PPoP growth of 19% YoY while elevated provisions resulted in PBT growth of 16% YoY. PAT at 33% YoY was aided by lower tax rate. Slippages were elevated though the operating performance remained strong with stable margins, robust fee growth and improving C/I ratio. We fine-tune our estimates factoring in strong other income and higher provisions as the bank has created certain specific provisions. Maintain PAT grew 33% YoY led by treasury income of INR6.8b, NCLT recovery came in at INR2b. Fees were robust even as provisions increased. NII grew 13% YoY to INR141.7b (in-line) with margins stable at 4.2%. Core fee income grew 24% YoY to INR45.3b, driving 19% YoY growth in total revenues. Opex grew ~18% YoY as the bank added 382 branches and ~18k employees over the past year. C/I ratio stood at 37.9% (-90bp QoQ, -61bp QoQ in core-cost income).

The Net Interest Margins (NIMs) bank has eased marginally to 4.2% in Q2FY2020 from 4.3% in Q1FY2020 and 4.3% Q2FY2019. The CASA deposits ratio of the bank was steady on sequential basis at 39.3%, but decline from 42% a year ago. The advances growth of the bank accelerated to 19% end September 2019 from 17% end June 2019, with 15% growth in the retail loan book. The bank has posted robust 39% growth in the...

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,...

Fee income rose strongly by 14% q-o-q. Strategy to leverage technology and deeper penetration pulled down C/I ratio to 38.8% from 39.9% in Q2 FY19; apart from strong access to sticky...

HDFC Bank reported strong profitability numbers, better than market and our estimates. PAT grew by 26% YoY led by higher other income (up 39% YoY). NII grew modestly by 15% YoY against a loan growth of 20% YoY due to a decline in its margins. NIM declined by 10bps QoQ to 4.2% due to higher LCR on books to support strong growth going forward while fee income growth remained strong at 23% YoY. In expectation of seasonal headwinds settling down, we have largely retained our...

Advances growth came in healthy at 19.5% YoY to | 896983 crore. Traction in retail book stayed slower at 14.7% YoY, primarily led by subdued growth in auto book. Unsecured book (personal, credit cards) continued to grow at ~25% YoY, contributing to growth in retail book. Corporate book grew at a faster rate at 24.9% YoY, offsetting a moderation in retail book. Deposits growth continue to remain healthy at 22.6% YoY to | 1021615 crore, led by strong growth of ~28% YoY in term deposit. CASA growth continues to moderate as CASA ratio declined 43 bps QoQ to 39.3%....

Another Stable Quarter Amidst a Sluggish Environment HDFC Bank reported a healthy set of numbers in 2QFY20 with NII and net profit growing by 15% and 27% YoY respectively. Gross NPAs was stable sequentially at 1.38%, with slippages contained at 1.8% (annualized) for the quarter. CASA grew by a healthy 15% YoY, with 13% YoY growth in SA deposits. High growth in employee expenses at 23% YoY was mainly owing to rise in emp base and higher gratuity related provisions. Fee-based income grew by a healthy 23% YoY, with 26% growth excluding MF distribution fee. Loan growth during the quarter was driven by home, agri and corporate loans. The lending subsidiary, HDB Financial Services, continued...

We believe that structural drivers are in place for HDFC Bank and see its market share gain trajectory to continue. HDFC Bank is well placed to benefit from the slew of stimulus measures announced by the government and the regulator of late. This will likely see better growth opportunities along with less pressure on pricing, with the possibility of improved spreads from Q1 levels. Positive business growth fundamentals would support strong earnings growth and help the company sustain its valuation premium as compared to...

Total deposits as of June 2019 amounted to Rs 954554 crore, up 18.5%. CASA deposits grew at 12.8% with savings account deposits at Rs 253,338 crore and current account deposits at Rs 125663 crore. Time deposits at Rs 575553 crore, grew 22.5%. CASA deposits comprised 39.7% of total deposits as on June2019. The bank's continued focus...

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,...