STOCK IN FOCUS
* Despite adverse operating environment, HDFC Bank continued to deliver strong performance on business growth as well as operating fronts.
* The Bank has delivered a healthy performance on business growth and operating front in 1QFY18. Despite a mere 6.1% YoY growth in banking industry loan, its loan book grew by 23.4% YoY and 4.8% QoQ,. This outperformance on loan growth front with a huge margin vs. the industry is really commendable as it is the second largest bank in India in terms of loan book size.
* Its gross NPA and net NPA increased by 23.1% QoQ and 37.1% QoQ, respectively in 1QFY18. However, we are not much concerned over this marginal rise in gross NPA, as the headline NPA and PCR continue to remain best-in-class in the industry.
* We have revised our loan growth target to 20-21% from earlier estimate of 17-18% led by relatively higher loan growth over last two quarters.
* As a result, we have upwardly revised our earnings estimates by 1.9% and 3.1% for FY18E & FY19E, respectively. We maintain our BUY recommendation on the stock with an upwardly revised Target Price of Rs1,940 (from Rs1,833 earlier) based on 4x FY19E Adjusted Book Value.
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