HDFC Bank (Buy) - Avendus

Despite the 13-bp rise in the incremental NPL and 30% y-o-y growth in NPL provisions during FY14f, the RoE is likely to stay close to 20%. We raise our incremental NPL assumption by 5-bp to 0.30% to factor the rise in slippage in select segments within retail during the last three quarters. Largely dependent on retail deposits, HDFCB is unlikely to see any material impact from the rise in the cost of short-term wholesale deposits. We estimated a marginal NIM contraction in FY14f. While the stock has underperformed the broader market by c8%, it outperformed the Bankex by c11% in the last three months. We rollover the TP to Sep14 and maintain it at INR761. The TP values the stock at the one-year forward adjusted P/B of 3.21x. We maintain Add.

Source : Equity Bulls

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