Neutral on HDFC Bank - Q4 FY2011 Update - Motilal Oswal

HDFC Bank (HDFCB IN; Mkt Cap USD24.2b, CMP Rs2,316, Neutral)

- Loans grew ~27% YoY (flat QoQ) to ~Rs1.6t. During the quarter, HDFC Bank sold down loans worth Rs15b (primarily comprising of CV and auto loans).

- CASA deposits grew 26% YoY (13% QoQ). Adjusted for one-offs in CA deposits, Core CASA was 51%. SA deposit growth remained strong (up 27% YoY).

- GNPA declined 5% QoQ in absolute terms and 6bp QoQ in percentage terms. NNPA ratio was stable at 0.2% v/s 0.3%.

- Slippages for FY11 were Rs14.5b, implying a delinquency rate of 1.15% v/s 2.64% in FY10, lowest since FY05.

- Fee income growth was healthy at 6% QoQ and 22% YoY to Rs10b.

- HDFC Bank has approved stock split of one equity share of face value Rs10 to five equity shares of face value Rs2. It has also declared dividend of Rs16.5/share. While key operating parameters remain superior, the stock appears fairly valued at 3.1x FY13E BV and 16.7x FY13E EPS. We maintain our Neutral rating, with a target price of Rs2,575 (3.5x FY13E BV).

Source : Equity Bulls

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