ACCUMULATE
CMP: Rs1,375 Target Price: Rs1,500
HDFC Bank's reported NII of Rs18.6bn, growth of 7.7%yoy, below our estimates as the growth in advances was lower than expected. However the bank held 4.0% NIMs as the CASA was maintained at 45% and deposits got repriced lower.
The highlights of the quarter were (1) CASA at 45% despite 5% qoq growth in advances and seasonally weak quarter, (2) fee income growth of 27% yoy despite just 10% yoy growth in assets, (3) better utilization ratios and (4) moderation in estimated slippages at <2% (annualised) vis-à-vis 3.4% in FY09 and 1.7% in FY08.
Driven by higher treasury income (Rs2.6bn against a loss of Rs776mn in Q1FY09), the operating profit has grown by 47.7% yoy to Rs15.2bn. However adjusted for treasury gains the core operating profit grew by 14.2%yoy to Rs12.6bn.
At the CMP, the stock is quoting at 3.4x FY10E ABV and 2.8x FY11E ABV. We maintain our ACCUMULATE recommendation on the stock with price target of Rs1500.
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