HDFC Bank - Steady show; HOLD - Emkay

HDFC Bank's Q4FY12 results inline with NII at Rs33.9bn and profit at Rs14.5bn. Stable growth in non-int inc and lower provisioning compensated for higher operating cost.

Aggressive branch expansion and largely in smaller cities has aided mobilization of SA deposits / retail loans. Break-even period for new branches is higher at 18-30months.

Loan growth at 22% yoy was skewed towards retail segment. Despite 400bps qoq decline in LDR; NIM expanded 10bps qoq. Deposits were up 18% yoy; TD were up 29% yoy.

Valuation premium to continue given strong operating matrix with stable asset quality and adequate capital. Roll our estimate to FY14ABV. Maintain HOLD with TP of Rs580.

Source : Equity Bulls

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