HDFC Bank’s Q1FY08 net profit at Rs3.2bn, was slightly ahead of our expectations driven by better than expected other income. The NII at Rs10.4bn
was in line with our expectations. The operating profit grew by 41.0% yoy driven
by higher Forex gains and treasury profits which compensated for higher Opex.
Adjusted for amortisation expenses the operating profit growth was in line with
our expectations. We expect the operating performance to get stronger as the
bank leverages its newly opened branches over last two quarters and capitalises
itself with follow on ADR issue.
We continue to like robust business model of HDFC Bank and robust quality of its
earnings as well as assets. Post the announcement of its FPO the stock has run
up significantly. At the current valuations 20.7x its FY2009E EPS and 3.4x
FY2009E P/ABV seem to be fairly pricing in the positives. We assign Accumulate
rating on the stock with price target of Rs1,210.
NII grows by 27.5% - NIM come back to normal 4.2%
HDFC Bank’s NII grew by 27.5% yoy to Rs10.4bn driven by 29.1% yoy growth in core
customer assets to Rs590bn and stable NIM. The core NIM improved by about 10bps yoy,
albeit they declined by 30bps qoq as expected.
Capital raising through ADR issue
The bank had tier I Capital adequacy of 9.2% at the end of Q1FY08. The bank is planning raise fresh equity capital of Rs42.0bn during the current year (of which Rs14.0bn) was raisedvia preferential allotment to its promoter HDFC. We expect the bank to raise balance equitycapital via an overseas issue over next quarter.
was in line with our expectations. The operating profit grew by 41.0% yoy driven
by higher Forex gains and treasury profits which compensated for higher Opex.
Adjusted for amortisation expenses the operating profit growth was in line with
our expectations. We expect the operating performance to get stronger as the
bank leverages its newly opened branches over last two quarters and capitalises
itself with follow on ADR issue.
We continue to like robust business model of HDFC Bank and robust quality of its
earnings as well as assets. Post the announcement of its FPO the stock has run
up significantly. At the current valuations 20.7x its FY2009E EPS and 3.4x
FY2009E P/ABV seem to be fairly pricing in the positives. We assign Accumulate
rating on the stock with price target of Rs1,210.
NII grows by 27.5% - NIM come back to normal 4.2%
HDFC Bank’s NII grew by 27.5% yoy to Rs10.4bn driven by 29.1% yoy growth in core
customer assets to Rs590bn and stable NIM. The core NIM improved by about 10bps yoy,
albeit they declined by 30bps qoq as expected.
Capital raising through ADR issue
The bank had tier I Capital adequacy of 9.2% at the end of Q1FY08. The bank is planning raise fresh equity capital of Rs42.0bn during the current year (of which Rs14.0bn) was raisedvia preferential allotment to its promoter HDFC. We expect the bank to raise balance equitycapital via an overseas issue over next quarter.
Valuations and viewWe continue to like robust business model of HDFC Bank and robust quality of its earnings aswell as assets. Post the announcement of its FPO the stock has run up significantly.
At thecurrent valuations 20.7x its FY2009E EPS and 3.4x FY2009E P/ABV seem to be fairly pricing
