HDFC Bank - 4QFY2013 Result Update - Angel Broking

HDFC Bank delivered yet another quarter of consistent performance on the bottom line front, with a growth of 30.1% yoy. On the operating front, while the growth in NII came in relatively lower at 20.6% (similar to last quarter), non-interest income grew only by moderate 10.7%, leading to growth of around 17% yoy in both operating income and pre-provisioning profits. On the asset quality front, the bank reported stability, as its Gross and Net NPA levels, on an absolute basis, came down sequentially by around 4% each, which aided it to report 27% yoy lower provisioning expenses and clock earnings growth of 30% yoy.

Balance sheet growth robust; Asset quality stable: The bank registered a robust growth in its balance sheet, with net advances and deposits growing at 22.7% and 20.1% yoy. On the deposits front, the current and saving deposits accretion was healthy, growing at 15.2% and 19.2% yoy, respectively. CASA ratio declined by around 100bp on a yoy basis to 47.4%. Within loan book, the bank manage to grow its retail loan book by 27.3% yoy and hence, share of retail advances to overall loan book increased by around 200bp yoy and 300bp qoq to 56.9%. NIMs for the bank came in at 4.5%, higher by 20bp qoq and 10bp yoy, primarily on higher retail lending. Non-interest income (excluding treasury) grew at subdued pace of 2.3% yoy, as fee income growth came in moderate at 10.8% and income from exchange transactions declined by 38.1% yoy. The bank reported treasury gains of Rs. 65cr for the quarter compared to a loss of Rs. 72cr in 4QFY2012. On asset quality front, the bank reported stability, as its Gross NPA ratio improved marginally by 5bp to 0.97%, while Net NPA ratio remained flat at 0.2%. PCR (excluding write-offs) for the bank remained stable sequentially at 79.9%.

Outlook and valuation: HDFC Bank is currently trading at one-year forward 3.8x P/ABV (3.3x FY2015E ABV), higher than its median of 3.5x (over FY2005-13). We believe the current valuations largely factor in the positives, leaving limited upside in the stock. Hence we maintain our Neutral rating on the stock.

Source : Equity Bulls

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