HDFC Bank Ltd. share price target

Key takeaways : Significant investment in digital initiatives has begun paying off: (a) ~20% of incremental unsecured personal loans sourced through 10-second personal loan product, (b) 8-10% of auto loans sourced through digital channel, (c) volumes on SmartBuy, HDFCB’s online market place almost 1/10th of Amazon’s volumes. HDFCB’s digital journey will continue through collaborations/partnerships. It is committed to platform-agnostic services. Lot of technology initiatives are in store – expect rollout by March 2017 (robots in branches, artificial intelligence). Significant investments in branches and technology would provide operating leverage and efficiency in ensuing quarters. Expect cost-to-income ratio to decline, led by higher business volumes.They maintain RI-model-based target price of INR1,450 (3.5x September 2018E BV).

 

HDFCB's minor miss (-3.2%) on our net profit estimate had some minor variations at core income lines (refer page 2 table) and the marginal tax rate, which was a per cent higher than our assumption. Expectedly there were no surprises in the results though the increase in GNPAs by 10bps QoQ to 1.04% was a bit eye catching. But as we have maintained through our review notes, there is a certain oscillation (not always seasonality) in HDFCB's GNPAs and the current level is below it's peak of 110bps (twice reported) in trailing four years. The net increase of Rs5.3bn was attributed a third each to business banking, agriculture, and retail. While we are comfortable with the current level of NPAs given HDFCB's earnings strength to...

ICICI Securities Ltd | Retail Equity Research Asset quality witnessed marginal pressure as GNPA ratio was up 10bps QoQ to 1.04% with absolute GNPA up 12% QoQ to | 4921 crore. Slippages were ~1.7% or | 1970 crore of which 40% came in from SME loans. However, the bank still remains best in class in terms of asset quality. Restructured assets were maintained at 0.1%. PAT traction continued at 20.2% YoY to | 3239 crore (in line with our estimate) led by healthy traction in NII at 22% YoY to | 7781 crore...

Earnings broadly inline with our expectation, preprovision profits was above our expectationledbystrongNIIgrowthduetoexpansioninNIMandstrongloangrowth. HoweverthiswasoffsetbyhigherNPAprovisions....

Deposits grew (18.5%YoY, 5%QoQ) to INR 5.74tn supported by growth in CASA deposits (19.2%YoY) led by higher growth in SA (22.2%YoY, 3.3%QoQ). Consequently, CASA ratio was maintained at 39.9%. Term deposits grew (18%YoY) as of 1QFY17. The bank...

Steady quarter; 20%+ earnings compounding continues on a higher base HDFC Bank's (HDFCB) 1QFY17 PAT grew 20% YoY (in line with expectations) to INR32.4b on the back of healthy core PPoP growth (+22% YoY). Key highlights for the quarter were: a) margin improvement (+10bp QoQ to 4.4%); b) stable C/I ratio (45%); c) strong retail loan growth (+25% YoY, +3% QoQ); and d) moderation in fee growth (15.5% YoY), which led to a decline in the fee/average assets ratio to 1.1%, the lowest level in 50 quarters. Strong growth in retail loans was led by home loans (+25% YoY, +5.5% QoQ)...

HDFC Bank is comfortably placed to capitalise on the expected improvement in the economic cycle. The Bank has been consistently outperforming its peers on both financial and operational fronts backed by strong liability franchise, low exposure to stressed sectors and superior risk management practices. We expect that the Bank would carve out credit growth of over 25% in FY17-18E with stable NIMs resulting into earnings growth of ~21% CAGR over FY16-18E. We reiterate our BUY recommendation on the stock with a revised...

ICICI Securities Ltd | Retail Equity Research Asset quality remained resilient with GNPA and NNPA ratios declining 3 bps and 1 bps QoQ to 0.94% and 0.28%, respectively, led by...

HDFC Bank's advances grew (27.1%YoY, 6.4%QoQ) to INR 4.64tn in 4QFY16. Growth in advances was driven by retail (29.6%YoY, 4.2%QoQ) and non-retail advances continued its momentum growing (25.0%YoY, 8.5%QoQ), largely driven by emerging corporate book....

NIM. Noninterest income growth moderate at 11.8%yoy led by 18% growth in fee income,evenasforexincomedeclined14%yoy. Whileslippagesincreasedmarginallyto17bnfromRs15.5bninQ3,inpercentageterms...