HDFC Bank - Q1FY14 Result Review - Angel Broking

HDFC bank delivered another quarter of consistent performance on the bottom line front, with a growth of 30.1% yoy, which was in-line with ours' as well as streets' expectations. On the operating front, while the growth in Net Interest Income came in healthy at 21% yoy at Rs. 4,419cr, non-interest income grew by 16.7% at Rs. 1,926 yoy, leading to healthy growth of around 19.7% yoy in operating income and 23.6% increase yoy in pre-provisioning profits at Rs. 3,306cr as against Rs. 2,675cr in 1QFY13. On the asset quality front, the Gross and Net NPA levels, on an absolute basis, increased sequentially by around 16% and 47%. On back of 9.4% lower provisioning expenses of Rs. 527cr as against Rs. 582cr in 1QFY13 the bank was able to record 30.1% increase in net profit at Rs. 1844cr.

Outlook and valuation: HDFC Bank is currently trading at one-year forward 3.7x P/BV FY2014E and 3.1x P/BV FY2015E. Relative to the rest of the banking sector, the bank's asset quality remains superior and likely to outperform in the current environment. Hence, we recommend an Accumulate view on it.

Source : Equity Bulls

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