HDFC Bank - Q2 FY13 Result Update - IIFL

- Robust loan growth of 23% yoy driven by retail segment

- NIM fell marginally; CASA ratio likely has bottomed-out

- Strong traction in fee income; C/I ratio increases on investment loss

- Sanguine asset quality drives lower provisioning

- RoA resilience to continue; BUY with 9-month target of Rs700

We expect HDFC Bank to continue delivering RoA of 1.5-1.7% through FY13 and FY14 even if retail credit cycle were to unfold. The resilient RoA performance would be supported by stable margins, improvement in C/I ratio and continuance of likely lower provisioning with substantial counter-cyclical buffer on the balance sheet. This gives us confidence that HDFC Bank stock would continue to move up notwithstanding its premium valuation. Revise estimates marginally and upgrade recommendation to BUY and 9-month target price to Rs700.

Source : Equity Bulls

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