Arihant Capital
HDFC Bank (Neutral)
CMP: ₹1,798
Target: ₹1,880
HDFC Bank reported steady set of numbers. Interest income increased by 15 per cent y-o-y to ₹19,670 crore, while on q-o-q basis it increased by 5 per cent. Interest expenses increased by 9 per cent y-o-y, while on q-o-q basis it increased by 7 per cent to ₹9,916 crore. Net interest income (NIM) increased by 22 per cent on y-o-y basis and 4 per cent on q-o-q basis to ₹9,725 crore.
Reported NIM stood steady at 4.3 per cent on q-o-q basis. Non-interest revenue was higher by 24 per cent q-o-q to ₹3,605 crore. Within this segment, revenues from fees & commissions increased to ₹2,614 crore. Foreign exchange & derivatives revenue stood at ₹384 crore and sale of investment was ₹355 crore against ₹283 crore on y-o-y basis.
Valuation: HDFC bank continued to report balanced performance. We have valued stock on
P/ABV(x) of 4.1(x) to its FY19E adjusted book value of ₹458 a share and arrived
at a fair value of ₹1,880.