 |
| Housing Development Finance Corporation (Photo credit: Wikipedia) |
Stock Update
HDFC Bank : Another Quarter Of 30% Earnings Growth......
Reco : Buy Cmp : 548 Target : 610
HDFC BankⳠnet profit of ~Rs 14.5 bn, up 30% YoY, in Q4FY12 was in line with our estimates. The bank was able to maintain earnings growth around 30% despite aggressive branch expansion due to shedding of bulk deposits and one-off income from float (tax-free bonds). Advances grew 22% YoY (1% QoQ) and NII grew 19% YoY (9% QoQ). Management maintained its guidance of above industry growth for coming quarters.
NIMs improve, asset quality stable: NIMs increased 10 bps QoQ to 4.2% supported by strong retail franchisee (CASA at ~48.4%). HDFC Bank reported treasury loss of Rs 715 mn in Q4 (vs. Rs 818 mn loss in Q3FY12). Asset quality remained stable despite challenging macro environment with absolute gross NPAs declining 1% QoQ to Rs 20 bn and gross NPA ratio remaining unchanged from Q3FY12 (~1%). We do not expect any major asset quality challenges in near term.
Aggressive branch expansion in Q4: It added 558 branches in FY12, of which 343 were added in Q4 itself, taking the total number of branches to 2,544.
Maintain BUY with TP of Rs 610 (11% upside)
We believe bank deserves premium valuation due to its: (a) strong retail franchise, (b) focus on Working Capital loans which have lower asset quality issues (c) Retail loans which have higher yields, and (d) consistency in core performance. Our TP of Rs 610 (3.5x FY14E ABV of Rs 173) implies 11% upside from CMP of Rs 548. The stock trades at 3.7x FY13E ABV of Rs 147 (20 x FY13E EPS of Rs 27) and 3.1x FY14E ABV of Rs 173 (16x FY14E EPS of Rs 33) Maintain BUY.
HDFC Bank : Another Quarter Of 30% Earnings Growth......
Reco : Buy Cmp : 548 Target : 610
HDFC BankⳠnet profit of ~Rs 14.5 bn, up 30% YoY, in Q4FY12 was in line with our estimates. The bank was able to maintain earnings growth around 30% despite aggressive branch expansion due to shedding of bulk deposits and one-off income from float (tax-free bonds). Advances grew 22% YoY (1% QoQ) and NII grew 19% YoY (9% QoQ). Management maintained its guidance of above industry growth for coming quarters.
NIMs improve, asset quality stable: NIMs increased 10 bps QoQ to 4.2% supported by strong retail franchisee (CASA at ~48.4%). HDFC Bank reported treasury loss of Rs 715 mn in Q4 (vs. Rs 818 mn loss in Q3FY12). Asset quality remained stable despite challenging macro environment with absolute gross NPAs declining 1% QoQ to Rs 20 bn and gross NPA ratio remaining unchanged from Q3FY12 (~1%). We do not expect any major asset quality challenges in near term.
Aggressive branch expansion in Q4: It added 558 branches in FY12, of which 343 were added in Q4 itself, taking the total number of branches to 2,544.
Maintain BUY with TP of Rs 610 (11% upside)
We believe bank deserves premium valuation due to its: (a) strong retail franchise, (b) focus on Working Capital loans which have lower asset quality issues (c) Retail loans which have higher yields, and (d) consistency in core performance. Our TP of Rs 610 (3.5x FY14E ABV of Rs 173) implies 11% upside from CMP of Rs 548. The stock trades at 3.7x FY13E ABV of Rs 147 (20 x FY13E EPS of Rs 27) and 3.1x FY14E ABV of Rs 173 (16x FY14E EPS of Rs 33) Maintain BUY.
No comments:
Post a Comment