INSUBCONTINENT EXCLUSIVE:
Prabhudas Lilladher has a buy call on HDFC Bank with a target price of Rs 2,700.
The current market price of HDFC Bank is Rs 2,245.65.
Time
period given by the brokerage is one year when HDFC Bank price can reach the defined target
Investment rationale by the brokerage-PPOP growth held up from strong NII: Overall core PPOP growth of 20 per cent year-on-year (YoY) was
slightly slower on back of sluggish core fee income (11 per cent YoY) and higher opex, although strong NII growth of 23 per cent YoY helped
NIMs improved by nearly 10bps QoQ to 4.4 per cent with as yields held up while cost of funds saw improvement on better liability mix
Earnings saw beat on back of lower provisions as asset quality held up steady.
Business growth has remained robust: Overall loans grew by
24.5 per cent YoY but was led by much stronger growth in non-retail loans of 31 per cent YoY as corporates saw better utilization of working
capital limits, loans backing NCLT assets and AA rated corporates which are short term in nature which should run off in next 30-60 days
Retail growth of 19 per cent YoY was slower in many quarters as bank seems to be consciously pausing in certain segments to assess risk
Unsecured growth continued to be strong at 29 per cent YoY, home loan growth has been catching up, while vehicle loans were slower.
Deposit
mobilization has been a challenge: Overall deposits grew by 17 per cent YoY while CASA was slower at 14 per cent YoY mainly backed by strong
CA growth which being largely seasonal
SA growth in particular has been slower at 11 per cent YoY (though better QoQ) as customer SA balances have been moving to TDs which also
has been the focus of the bank helping granularize deposits.
Steady asset quality: GNPA/NNPAs of 136/39bps of loans has been steady with
strong PCR of 71 per cent
see robust loan growth of 24 per cent YoY to Rs 56.5bn with NII growing by 17 per cent YoY and PAT by 24 per cent YoY