Equirus Securities
HDFC Bank (Add)
CMP: ₹1,808.80
Target: ₹2,000
HDFC Bank (HDFCB) reported an in-line 2QFY18 PAT of ₹4,150 crore (Equirus estimate ₹4,160 crore) driven
by healthy NIMs (4.3 per cent) and loan growth (+22 per cent y-o-y). Wholesale loans grew 27 per cent y-o-y while the CASA ratio declined to 42.9 per cent (1QFY18: 44 per cent). Provisions jumped 97 per cent y-o-y as the bank provided about ₹700 crore towards one standard 5:25 restructured account which is currently under discussion with the regulator. Slippages came in at ₹2,470 crore (1QFY18: ₹3,100 crore). We believe HDFCB will continue its steady performance over FY17-FY20E with a 19 per cent loan CAGR led by wholesale loans, NIMs within the guided range of 4.1-4.4 per cent, an improvement in the C/I ratio and stable asset quality. We largely maintain our earnings estimate and retain ADD with an ERoE-based September 2018 TP of ₹2,000 (₹1,875 earlier) which corresponds to a 4.9x/4.2x September ’18/ September ’19 ABV of ₹408/476.
Key risks: A protracted slowdown in the economy, considerable increase in fresh slippages and adverse regulatory changes are key risks to our call.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.