HDFC Bank Ltd. share price target

Healthy Performance in Tough Business Environment; Maintain BUY Despite adverse macroeconomic scenario, HDFC Bank has delivered healthy performance on operating and assets quality front in 3QFY17. Its PAT grew by 15.1% yoy & 11.9% qoq to Rs38.6bn led by strong growth in treasury profit (+40.6% qoq to Rs4bn) along with healthy growth in NII (+17.6% yoy & 4% qoq to Rs83.1bn). NIMs remained stable at 4.1% in 3QFY17 compared to 4.2% in 2QFY17. However, loan book grew by mere 0.1% qoq owing to 46.8% qoq decline in overseas loan book due to unwinding of FCNR deposits related loans along with 3.4% qoq decline in business banking loan book due to payback into loan accounts...

Balance sheet momentum marginally undershooting our estimate, should improve Loan growth at 18% YoY was a shade lower than our estimate of ~19%YoY (22.5% YoY for FY17E with growth split 30:70 between H1 and H2). We expect HDFCB's loan growth to accelerate in H2FY17E. Nevertheless, some of the growth in corporate segment is happening through instruments like CPs, which explains a bit the higher growth in investments (though the higher growth is heavily influenced by FCNR redemption related liquidity invested temporarily in short term instruments). The retail momentum (based on HDFCB's internal classification) was driven by business banking and auto loans while home loans, which had...

ICICI Securities Ltd | Retail Equity Research PAT increased 20.4% YoY to | 3455 crore, in line with our estimate NII grew 19.6% YoY to | 7994 crore. It was led by healthy credit growth & margins of 4.2%. Credit grew at 18.1% (vs. estimate of 22% YoY) to | 494418 crore led by higher than systemic growth in both domestic retail (up 21.7% YoY) & wholesale book (up 14.3% YoY) Among retail, unsecured loans traction continued to remain strong with growth of 40% YoY in personal loans and 19% YoY in credit...

Robust operating metrics; continue to maintain BUY Led by strong growth in NII, treasury and forex income, HDFC Bank has reported healthy growth in profit in 2QFY17. Its NII grew by strong 19.6% yoy (2.7% qoq) led by 18.1% yoy (5.1% qoq) growth in loan book. However, NIMs declined by 20bps qoq as the Bank managed to maintain higher liquidity to facilitate redemption of FCNR deposits. Deposit growth remained sanguine on account of robust growth in CASA & Retail term deposits. Maintaining our positive stance, we reiterate our BUY recommendation on the stock with...

HDFC Bank has been able to maintain its relatively superior performance in terms of asset quality (stress assets ratio below 1.3%) and margins (>4% levels) along with clocking healthy business growth (>20% YoY). Going ahead, we believe that with a revival in the economy and capex cycle, the bank may see a higher than expected trajectory in corporate book, which is ~44% of loan at | 470623 crore as on Q1FY17. Retail traction would continue to remain strong driven by personal loans, credit cards, auto and home loans. This would enable the bank to gain market share. Further,...

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...