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October 19, 2019 1
Rating: BUY | CMP: Rs1,229 | TP: Rs1,406
Holding on to a good show
Quick Pointers
Slightly slower NII growth of 15% YoY on excess liquidity but core PPOP
growth strong at 18% YoY
Lower tax rate benefit used for higher contingency provisions of Rs6.6bn
HDFCB saw strong earnings performance at Rs63.5bn (PLe: Rs60.1bn) on
back of lower tax rate & steady operating performance. Although, NII growth
was slower at 15% YoY on back of solid growth in term liabilities but was
offset by both strong fees & treasury gains. Asset quality was quite stable
with slippages & w.off down sequentially and commentary on delinquencies
in portfolios was steady. On prudent basis, bank used the lower tax rate to
make another Rs6.6bn of contingency provisions and passing Rs4.5bn of net
effect (post DTA) to earnings. Continued penetration provides strong access
to sticky customer base and with steady asset quality trends, NIMs of 4.2-
4.3% and ROEs of 18-19%, HDFCB continues to remain on strong path. Retain
BUY with TP of Rs1,406 (unchanged) based on 3.7x Sep-21 ABV.
PPOP performance remains intact: Overall core PPOP grew by 18% YoY on
back of strong core fee income growth of 26% YoY, which bank mentioned was
driven by strong TP insurance, payments biz etc. NII growth of 15% YoY was
slightly slower as reported NIMs dropped by 10bps to 4.2% primarily due to
excess liquidity (otherwise NIM rises by 15bps QoQ) carried by bank and
continued aggression to grow retail term deposits (strategy). Part of excessive
liquidity was used as treasury gains (2x QoQ growth), supporting overall PPOP
& other income.
Loan growth pick-up from corporate: Overall loan growth was 19.5% YoY
but was driven by corporate book which grew by 25% YoY/13% QoQ with bank
mentioning a few large transactions to strong corporates in telecom/NBFCs
and across board growth. Bank has seen retail growth slow down to 15% YoY
(marginally slower than industry) as Auto loans grew by 3.0% YoY/-1.7% QoQ
and certain segments like gold loans, LAS continue to be slow as well. Ex-Auto
consumer loans continue to grow at 19-20% rate with unsecured/home loans/
Biz banking doing well.
Liabilities aggression continues: Bank’s deposit growth at 22.6% YoY
continues to be higher than loan growth (88% C-D ratio) with aggression on
term deposits growing 28% YoY/8% QoQ especially retail. CASA franchise
also continues to grow steady at 15% YoY with SA growth of 13% YoY.
Steady asset quality trends this quarter: Slippages came of QoQ by 12%
with absence of large agri slippages helping headline asset quality to be steady
with GNPAs/NNPAs of 1.38%/0.42% and PCR of 70%. Bank used the lower
tax rate (post DTA) to provide Rs6.6bn of contingency provisions. Bank
mentioned earlier indicators of stress/delinquencies on the newer portfolio in
unsecured are trending better and also similarly in biz banking & secured
portfolio which should be seen flowing in ahead.
HDFC Bank (HDFCB IN)
October 19, 2019
Q2FY20 Result Update
☑ Change in Estimates | Target | Reco
Change in Estimates
Current Previous
FY21E FY22E FY21E FY22E
Rating BUY BUY
Target Price 1,406 1,406
NII (Rs. m) 682,544 815,139 688,752 823,040
% Chng. (0.9) (1.0)
Op. Profit (Rs. m)573,705 683,156 567,546 677,168
% Chng. 1.1 0.9
EPS (Rs.) 61.2 73.7 61.3 73.7
% Chng. (0.2) -
Key Financials - Standalone
Y/e Mar FY19 FY20E FY21E FY22E
NII (Rs bn) 482 573 683 815
Op. Profit (Rs bn) 397 484 574 683
PAT (Rs bn) 211 266 334 402
EPS (Rs.) 39.6 48.9 61.2 73.7
Gr. (%) 16.9 23.3 25.3 20.4
DPS (Rs.) 6.2 9.5 9.5 11.0
Yield (%) 0.5 0.8 0.8 0.9
NIM (%) 4.4 4.4 4.5 4.6
RoAE (%) 16.5 16.7 18.2 18.8
RoAA (%) 1.8 2.0 2.1 2.2
P/BV (x) 4.5 3.9 3.4 2.9
P/ABV (x) 4.7 4.1 3.5 3.0
PE (x) 31.0 25.1 20.1 16.7
CAR (%) 17.1 16.7 16.1 15.7
Key Data HDBK.BO | HDFCB IN
52-W High / Low Rs.1,285 / Rs.940
Sensex / Nifty 39,298 / 11,662
Market Cap Rs.6,723bn/ $ 94,450m
Shares Outstanding 5,470m
3M Avg. Daily Value Rs.20190.38m
Shareholding Pattern (%)
Promoter’s 26.21
Foreign 37.64
Domestic Institution 21.57
Public & Others 14.58
Promoter Pledge (Rs bn) -
Stock Performance (%)
1M 6M 12M
Absolute 12.4 7.4 24.8
Relative 4.6 7.0 10.4
Pritesh Bumb
[email protected] | 91-22-66322232
Riddhi Mehta
[email protected] | 91-22-66322258
HDFC Bank
October 19, 2019 2
Strong core performance continues but higher provisioning
(Rs m) Q2FY20 Q2FY19 YoY gr.
(%) Q1FY20
QoQ gr.
(%)
Interest income 281,663 241,995 16.4 273,916 2.8
Interest Expended 146,512 124,362 17.8 140,973 3.9
Net interest income (NII) 135,150 117,634 14.9 132,943 1.7
- Treasury income 4,807 (328) n/a 2,120 126.7
Other income 55,887 40,156 39.2 49,703 12.4
Total income 191,038 157,789 21.1 182,645 4.6
Operating expenses 74,057 62,991 17.6 71,173 4.1
-Staff expenses 23,551 19,092 23.4 22,174 6.2
-Other expenses 50,506 43,898 15.1 48,999 3.1
Operating profit 116,981 94,799 23.4 111,472 4.9
Core operating profit 112,174 95,127 17.9 109,352 2.6
Total provisions 27,007 18,200 48.4 26,137 3.3
Profit before tax 89,974 76,599 17.5 85,336 5.4
Tax 26,524 26,543 (0.1) 29,654 (10.6)
Profit after tax 63,450 50,057 26.8 55,682 14.0
Balance sheet (Rs m)
Deposits 10,216,149 8,333,641 22.6 9,545,537 7.0
Advances 8,969,838 7,508,381 19.5 8,297,298 8.1
Profitability ratios
YoA – Calc 10.4 10.3 11 10.6 (15)
CoF - Calc 5.4 5.2 17 5.4 2
NIM - Rep 4.2 4.3 (10) 4.3 (10)
RoaA 2.0 1.8 18 1.8 18
RoaE 16.3 16.4 (5) 14.6 169
Asset Quality
Gross NPL (Rs mn) 125,082 100,977 23.9 117,690 6.3
Net NPL (Rs mn) 37,910 30,282 25.2 35,672 6.3
Gross NPL ratio 1.4 1.3 5 1.4 (2)
Net NPL ratio 0.4 0.4 2 0.4 (1)
Coverage ratio - Calc 69.7 70.0 (32) 69.7 0
Business & Other Ratios
Low-cost deposit mix 39.3 42.0 (270) 39.7 (40)
Cost-income ratio 38.8 39.9 (116) 39.0 (20)
Non int. inc / total income 29.3 25.4 381 27.2 204
Credit deposit ratio 87.8 90.1 (230) 86.9 88
CAR 17.5 17.1 40 16.9 60
Tier-I 16.2 15.6 60 15.6 60
Source: Company, PL
NII growth was slower at 15% YoY on
back of higher accretion in term
deposits
Other income growth comes strong at
40% YoY supported by steady fees
and treasury
With steady opex and strong other
income, bank’s C/I came down
116bps to 38.8%
Higher provisions made on back of
lower tax benefit towards
contingencies provisions
Business growth was better despite
of pull down from auto book
NIMs come down marginally by
10bps on account of cautious loan
book expansion and higher deposit
accretion
Asset quality was steady with lower
slippages this quarter
CASA growth was decent at 15%
YoY but ratio coming off on higher
term deposit growth
HDFC Bank
October 19, 2019 3
Key Q2FY20 Concall Highlights
Business outlook & growth
Assets – Overall growth in retail book has been selective and healthy with
advances ex-vehicle growing at 24% YoY. In Biz banking steady streams
available with healthy pipeline pushed from improved penetration with higher
distribution along with digital offering Corporate book saw strong growth as
bank grew across board but also took few exposures in NBFCs, Telecom etc
but to best of the entities. Retail growth is slower but is best selected book for
underwriting given the environment. Disbursements in Auto loan book have
been decent with 12-13% sequential growth in Q2FY20 with
improvement/stability expected in the upcoming festive quarter.
Liabilities – Granular deposits continues to remain as a core strategy.
Management is happy to see customers dipping into savings and move to FDs
but closely watches on the incremental cost of deposits.
Fees/Margins/Opex
Ex-MFs fees core fees have grown by 26% YoY. Fee income has been driven
by retail but loan processing has been moderate as slowdown was from
vehicles, though good support came in TPD of insurance, payments business.
Bank has maintained a liquidity coverage ratio higher than the mandatory
levels at 133%, which had it been around 115% it would have resulted in a
strong NII growth of 19% or 15bps improvement QoQ. Bank monetized some
excess liquidity to make higher treasury gains (2x QoQ).
Higher employee costs were on account of aggressive hiring on continued
penetration and as part of continued investments including technology.
Asset quality
Bank maintains stability across watchlist/downgraded accounts and personal
loan portfolio delinquencies. Barring a sharp spike GNPAs in auto dealership
loan accounts, core auto loan portfolio has been stable as suggested in 20F.
GNPA ex-Agri remain stable QoQ at 1.17%, while Agri GNPA came down YoY
to 5.65% from 6.06% in Jun-19.
Bank continues to maintain a stock of floating provision of Rs14.5bn (16bps of
loans) while write offs were Rs15.9bn and slippages at Rs37.1bn both down
12%/19% QoQ respectively. Bank set aside Rs6.6bn of contingency provisions
taking benefit from lower tax rate.
Others:
Subs performance: HDB’s loan growth slowed to 16% YoY to Rs55.8bn,
though NII growth was came in at 25% YoY and PAT growth was slower owing
to higher provisioning as asset quality deteriorated sequentially on change in
recognition practices (daily recognition & borrower wise tagging) and stood at
3.4%. HDB’s Tier-I was stood at 13.3% which is very near to the regulatory
requirements.
HDFC Bank
October 19, 2019 4
Retail loans slow on back of slowdown in auto segment
Loan Composition (Rs mn) Q2FY20 Q2FY19 YoY gr.
(%) Q1FY20
QoQ gr.
(%)
Car Loans 807,840 803,360 0.6 819,130 (1.4)
CV loans 284,900 255,080 11.7 292,290 (2.5)
2 wheeler loans 98,510 96,890 1.7 100,700 (2.2)
Sub-total - Auto Loans 1,191,250 1,155,330 3.1 1,212,120 (1.7)
Personal loans 1,020,800 834,260 22.4 971,480 5.1
Business banking 626,890 541,800 15.7 577,200 8.6
Loan against shares 18,280 18,240 0.2 17,800 2.7
Credit Cards 520,430 405,350 28.4 495,230 5.1
Home loans 600,170 478,610 25.4 557,690 7.6
Gold Loans 53,200 51,930 2.4 52,320 1.7
Other Retail 575,430 529,470 8.7 547,690 5.1
Retail Loans 4,606,450 4,014,990 14.7 4,431,530 3.9
Non Retail Loans 4,363,388 3,493,391 24.9 3,865,768 12.9
Total Advances 8,969,838 7,508,381 19.5 8,297,298 8.1
Loan Mix
Vehicle Loans 13.3% 15.4% (2.1) 14.6% (1.3)
Unsecured Loans 17.2% 16.5% 0.7 17.7% (0.5)
Retail Loans 51.4% 53.5% (2.1) 53.4% (2.1)
Non Retail Loans 48.6% 46.5% 2.1 46.6% 2.1
Source: Company, PL
Loan book composition as per internal classification
Loan Composition (Rs m) Q2FY20 Q2FY19 YoY gr. (%) Q1FY20 QoQ gr. (%)
Car Loans 907,480 919,200 (1.3) 920,860 (1.5)
CV loans 542,720 495,480 9.5 552,000 (1.7)
2 wheeler loans 112,320 112,900 (0.5) 113,340 (0.9)
Sub-total - Auto Loans 1,562,520 1,527,580 2.3 1,586,200 (1.5)
Personal loans 1,028,610 841,450 22.2 979,860 5.0
Business banking 1,365,780 1,170,390 16.7 1,260,990 8.3
Loan against shares 32,520 35,800 (9.2) 33,500 (2.9)
Credit Cards 520,430 405,350 28.4 495,230 5.1
Home loans 600,290 478,750 25.4 557,810 7.6
Gold loans 60,860 57,010 6.8 59,240 2.7
Other Retail 441,810 580,910 (23.9) 608,660 (27.4)
Retail Total 5,612,820 5,097,240 10.1 5,581,490 0.6
Source: Company, PL
Retail growth slowing…
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
4Q
14
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
2Q
16
3Q
16
4Q
16
1Q
17
2Q
17
3Q
17
4Q
17
1Q
18
2Q
18
3Q
18
4Q
18
1Q
19
2Q
19
3Q
19
4Q
19
1Q
20
2Q
20
Retail Loan Gr. (%) Wholesale Loan Gr. (%)
Source: Company, PL
…while non-auto doing well
-5%0%5%
10%15%20%25%30%35%40%45%
4Q
14
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
2Q
16
3Q
16
4Q
16
1Q
17
2Q
17
3Q
17
4Q
17
1Q
18
2Q
18
3Q
18
4Q
18
1Q
19
2Q
19
3Q
19
4Q
19
1Q
20
2Q
20
Auto Gr. Unsecured Gr. Retail Ex-Auto Gr.
Source: Company, PL
Slower growth in vehicle loans has
affected retail growth with Bank
maintaining cautiousness on
unsecured retail side.
Retail growth mainly being helped by
Home loans and Credit Cards
segment
Corporate loans growth was strong at
13% QoQ
HDFC Bank
October 19, 2019 5
Break up of retail book as percentage of retail loans
22% 21% 22% 21% 20% 20% 20% 19% 18% 18%
7% 6% 6% 6% 7% 6% 6% 7% 7% 6%
18% 19% 20% 20% 20% 21% 21% 22% 22% 22%
13% 14% 14% 15% 14% 13% 13% 13% 13% 14%
10% 10% 10% 10% 10% 10% 11% 11% 11% 11%
13% 12% 11% 10% 12% 12% 12% 12% 13% 13%
13% 14% 13% 13% 13% 13% 12% 13% 12% 12%
1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20
Car CV 2W PL Biz Bank LAS CC Home loans Gold Loans Other
Source: Company, PL
Core fees strong growth recovery
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
3Q
14
4Q
14
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
2Q
16
3Q
16
4Q
16
1Q
17
2Q
17
3Q
17
4Q
17
1Q
18
2Q
18
3Q
18
4Q
18
1Q
19
2Q
19
3Q
19
4Q
19
1Q
20
2Q
20
Core fees growth YoY
Source: Company, PL
Elevated hiring on business expansion pushes staff opex up
-5%
0%
5%
10%
15%
20%
25%
30%
35%
3Q
14
4Q
14
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
2Q
16
3Q
16
4Q
16
1Q
17
2Q
17
3Q
17
4Q
17
1Q
18
2Q
18
3Q
18
4Q
18
1Q
19
2Q
19
3Q
19
4Q
19
1Q
20
2Q
20
Employee expenses growth YoY Other Opex growth YoY
Source: Company, PL
HDFC Bank
October 19, 2019 6
Margins decline on higher deposit accretion
4.4
%
4.4
%
4.3
%
4.2
%
4.3
%
4.3
%
4.4
%
4.2
%
4.1
% 4.3
%
4.4
%
4.3
%
4.3
%
4.3
%
4.2
%
4.3
%
4.3
%
4.4
%
4.3
%
4.2
%
3Q
15
4Q
15
1Q
16
2Q
16
3Q
16
4Q
16
1Q
17
2Q
17
3Q
17
4Q
17
1Q
18
2Q
18
3Q
18
4Q
18
1Q
19
2Q
19
3Q
19
4Q
19
1Q
20
2Q
20
NIM (%)
Source: Company, PL
CASA growth slow as focus on TDs continues
14%
16%
14%
14%
14%
16%
13%
13%
16%
18%
15%
14%
14%
15%
14%
14%
13%
15%
13%
13%
27% 28%
26%
26%
26% 27%
27%
27% 29%
30%
29%
29%
29%
28%
28%
28%
28%
27%
27%
26%
3Q
15
4Q
15
1Q
16
2Q
16
3Q
16
4Q
16
1Q
17
2Q
17
3Q
17
4Q
17
1Q
18
2Q
18
3Q
18
4Q
18
1Q
19
2Q
19
3Q
19
4Q
19
1Q
20
2Q
20
CA Ratio (%) SA Ratio (%)
Source: Company, PL
Asset quality remained steady
0.15%
0.20%
0.25%
0.30%
0.35%
0.40%
0.45%
0.50%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
3Q
14
4Q
14
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
2Q
16
3Q
16
4Q
16
1Q
17
2Q
17
3Q
17
4Q
17
1Q
18
2Q
18
3Q
18
4Q
18
1Q
19
2Q
19
3Q
19
4Q
19
1Q
20
2Q
20
Gross NPA (%) Net NPA (%)
Source: Company Data, PL Research
ROEs to benefit from lower tax rate but some passed to provisions
RoA decomposition FY15 FY16 FY17 FY18 FY19 FY20E FY21E FY22E
Interest income 8.96 9.05 8.64 8.32 8.57 8.67 8.76 8.81
Interest expenses 4.82 4.90 4.51 4.17 4.40 4.41 4.42 4.40
Net interest income 4.14 4.15 4.13 4.16 4.18 4.26 4.34 4.41
Treasury income 0.29 0.29 0.30 0.25 0.18 0.23 0.17 0.14
Other Inc. from operations 1.38 1.32 1.23 1.33 1.34 1.37 1.41 1.38
Total income 5.80 5.76 5.66 5.74 5.71 5.86 5.91 5.93
Employee expenses 0.88 0.86 0.81 0.71 0.67 0.70 0.70 0.70
Other operating expenses 1.71 1.69 1.65 1.65 1.59 1.56 1.56 1.53
Operating profit 3.22 3.21 3.21 3.38 3.44 3.60 3.65 3.69
Tax 0.94 0.95 0.95 0.96 0.96 0.83 0.75 0.77
Loan loss provisions 0.38 0.41 0.45 0.61 0.65 0.79 0.77 0.75
RoAA 1.89 1.85 1.81 1.81 1.83 1.98 2.12 2.17
RoAE 19.37 18.26 17.95 17.87 16.50 16.70 18.20 18.83
Source: Company Data, PL Research
HDFC Bank
October 19, 2019 7
We retain our TP at Rs1,406 based on 3.7x Sep FY21 ABV
PT calculation and upside
Market risk premium 6.0%
Risk-free rate 7.0%
Adjusted beta 1.04
Terminal Growth 5.0%
Cost of equity 13.8%
Fair price - P/ABV 1,406
Target P/ABV 3.7
Target P/E 20.8
Current price, Rs 1,229
Upside (%) 14.4%
Dividend yield (%) 1.7%
Total return (%) 16.1%
Source: Company Data, PL Research
Change in earnings estimates – We adjust deposit growth, incorporate higher fees/treasury offset by provisions
(Rs mn) Old Revised %Change
FY20E FY21E FY22E FY20E FY21E FY22E FY20E FY21E FY22E
Net interest income 578,586 688,752 823,040 573,337 682,544 815,139 (0.9) (0.9) (1.0)
Operating profit 478,299 567,546 677,168 483,981 573,705 683,156 1.2 1.1 0.9
Net profit 267,006 334,077 401,529 266,258 333,530 401,595 (0.3) (0.2) 0.0
EPS (Rs) 49.0 61.3 73.7 48.9 61.2 73.7 (0.3) (0.2) 0.0
ABVPS (Rs) 298.5 347.2 405.9 298.5 347.4 406.2 (0.0) 0.0 0.1
Price target (Rs) 1,406 1,406 0.0
Recommendation BUY BUY
Source: Company Data, PL Research
HDFCB one year forward P/ABV trend
2.5
3.0
3.5
4.0
4.5
Oct-13
Jan-1
4
Apr-
14
Jul-14
Oct-14
Jan-1
5
Apr-
15
Jul-15
Oct-15
Jan-1
6
Apr-
16
Jul-16
Oct-16
Jan-1
7
Apr-
17
Jul-17
Oct-17
Jan-1
8
Apr-
18
Jul-18
Oct-18
Jan-1
9
Apr-
19
Jul-19
Oct-19
P/ABV 3 yr avg. avg. + 1 SD avg. - 1 SD
Source: Company Data, PL Research
HDFC Bank
October 19, 2019 8
Income Statement (Rs. m)
Y/e Mar FY19 FY20E FY21E FY22E
Int. Earned from Adv. 775,441 935,265 1,117,641 1,332,188
Int. Earned from invt. 199,975 215,340 243,770 279,395
Others 14,304 16,682 16,558 17,230
Total Interest Income 989,720 1,167,287 1,377,969 1,628,813
Interest Expenses 507,288 593,949 695,425 813,673
Net Interest Income 482,432 573,337 682,544 815,139
Growth(%) 19.1 19.7 17.9 18.0
Non Interest Income 176,259 215,036 247,291 281,912
Net Total Income 658,690 788,373 929,835 1,097,051
Growth(%) 22.1 18.6 17.6 17.6
Employee Expenses 77,618 93,917 110,822 130,216
Other Expenses 172,175 198,001 230,672 267,579
Operating Expenses 261,194 304,393 356,130 413,895
Operating Profit 397,497 483,981 573,705 683,156
Growth(%) 21.8 21.8 18.5 19.1
NPA Provision 63,941 86,332 98,868 113,268
Total Provisions 75,501 106,348 121,768 138,989
PBT 321,996 377,632 451,937 544,167
Tax Provision 111,215 111,374 118,408 142,572
Effective tax rate (%) 34.5 29.5 26.2 26.2
PAT 210,781 266,258 333,530 401,595
Growth(%) 20.5 26.3 25.3 20.4
Balance Sheet (Rs. m)
Y/e Mar FY19 FY20E FY21E FY22E
Face value 1 1 1 1
No. of equity shares 5,447 5,447 5,447 5,447
Equity 5,447 5,447 5,447 5,447
Networth 1,492,064 1,696,361 1,967,930 2,297,781
Growth(%) 40.4 13.7 16.0 16.8
Adj. Networth to NNPAs 32,145 39,785 37,441 42,078
Deposits 9,231,409 11,077,691 13,182,452 15,687,118
Growth(%) 17.0 20.0 19.0 19.0
CASA Deposits 3,911,981 4,486,465 5,404,806 6,478,780
% of total deposits 42.4 40.5 41.0 41.3
Total Liabilities 12,445,407 14,471,120 16,988,311 19,989,428
Net Advances 8,194,012 9,791,845 11,701,254 14,041,505
Growth(%) 24.5 19.5 19.5 20.0
Investments 2,905,879 3,229,106 3,764,914 4,251,228
Total Assets 12,445,407 14,471,120 16,988,311 19,989,428
Growth (%) 17.0 16.3 17.4 17.7
Asset Quality
Y/e Mar FY19 FY20E FY21E FY22E
Gross NPAs (Rs m) 112,242 134,928 134,332 155,018
Net NPAs (Rs m) 32,145 39,785 37,441 42,078
Gr. NPAs to Gross Adv.(%) 1.4 1.4 1.1 1.1
Net NPAs to Net Adv. (%) 0.4 0.4 0.3 0.3
NPA Coverage % 71.4 70.5 72.1 72.9
Profitability (%)
Y/e Mar FY19 FY20E FY21E FY22E
NIM 4.4 4.4 4.5 4.6
RoAA 1.8 2.0 2.1 2.2
RoAE 16.5 16.7 18.2 18.8
Tier I 15.8 15.1 14.7 14.4
CRAR 17.1 16.7 16.1 15.7
Source: Company Data, PL Research
Quarterly Financials (Rs. m)
Y/e Mar Q3FY19 Q4FY19 Q1FY20 Q2FY20
Interest Income 258,903 263,333 273,916 281,663
Interest Expenses 133,135 132,438 140,973 146,512
Net Interest Income 125,768 130,895 132,943 135,150
YoY growth (%) 29.7 24.2 20.1 17.8
CEB 36,468 36,921 35,516 40,545
Treasury - - - -
Non Interest Income 49,210 48,712 49,703 55,887
Total Income 308,113 312,045 323,618 337,550
Employee Expenses 19,676 20,744 22,174 23,551
Other expenses 47,517 50,427 48,999 50,506
Operating Expenses 67,193 71,171 71,173 74,057
Operating Profit 107,784 108,436 111,472 116,981
YoY growth (%) 27.5 22.1 28.9 23.4
Core Operating Profits 103,044 106,147 109,352 112,174
NPA Provision 17,346 14,312 24,135 20,380
Others Provisions 22,115 18,892 26,137 27,007
Total Provisions 22,115 18,892 26,137 27,007
Profit Before Tax 85,669 89,544 85,336 89,974
Tax 29,810 30,693 29,654 26,524
PAT 55,859 58,851 55,682 63,450
YoY growth (%) 20.3 21.5 21.0 26.8
Deposits 8,525,019 9,231,409 9,545,537 10,216,149
YoY growth (%) 22.0 17.0 18.5 22.6
Advances 7,809,512 8,194,012 8,297,298 8,969,838
YoY growth (%) 23.7 24.5 17.1 19.5
Key Ratios
Y/e Mar FY19 FY20E FY21E FY22E
CMP (Rs) 1,229 1,229 1,229 1,229
EPS (Rs) 39.6 48.9 61.2 73.7
Book Value (Rs) 274 311 361 422
Adj. BV (70%)(Rs) 263 299 347 406
P/E (x) 31.0 25.1 20.1 16.7
P/BV (x) 4.5 3.9 3.4 2.9
P/ABV (x) 4.7 4.1 3.5 3.0
DPS (Rs) 6.2 9.5 9.5 11.0
Dividend Payout Ratio (%) 19.2 23.3 18.6 17.9
Dividend Yield (%) 0.5 0.8 0.8 0.9
Efficiency
Y/e Mar FY19 FY20E FY21E FY22E
Cost-Income Ratio (%) 39.7 38.6 38.3 37.7
C-D Ratio (%) 88.8 88.4 88.8 89.5
Business per Emp. (Rs m) 178 209 244 286
Profit per Emp. (Rs lacs) 21 27 33 39
Business per Branch (Rs m) 3,415 3,822 4,259 4,756
Profit per Branch (Rs m) 41 49 57 64
Du-Pont
Y/e Mar FY19 FY20E FY21E FY22E
NII 4.18 4.26 4.34 4.41
Total Income 5.71 5.86 5.91 5.93
Operating Expenses 2.26 2.26 2.26 2.24
PPoP 3.44 3.60 3.65 3.69
Total provisions 0.65 0.79 0.77 0.75
RoAA 1.83 1.98 2.12 2.17
RoAE 16.50 16.70 18.20 18.83
Source: Company Data, PL Research
HDFC Bank
October 19, 2019 9
Price Chart Recommendation History
No. Date Rating TP (Rs.) Share Price (Rs.)
1 3-Oct-19 BUY 1,406 1,224
2 12-Aug-19 BUY 2,732 2,285
3 4-Jul-19 BUY 2,700 2,484
4 21-Apr-19 BUY 2,700 2,293
5 5-Apr-19 BUY 2,371 2,306
6 19-Jan-19 BUY 2,371 2,130
7 7-Jan-19 BUY 2,310 2,121
8 21-Oct-18 BUY 2,310 1,968
Analyst Coverage Universe
Sr. No. Company Name Rating TP (Rs) Share Price (Rs)
1 Axis Bank Accumulate 800 668
2 Bank of Baroda BUY 115 91
3 Bank of India Reduce 58 62
4 Federal Bank BUY 102 82
5 HDFC BUY 2,700 2,376
6 HDFC Bank BUY 1,406 1,224
7 HDFC Life Insurance Company BUY 585 593
8 ICICI Bank BUY 518 427
9 ICICI Prudential Life Insurance Company BUY 511 469
10 IDFC First Bank BUY 54 37
11 IndusInd Bank BUY 1,640 1,229
12 Jammu & Kashmir Bank Under Review - 32
13 Kotak Mahindra Bank Hold 1,586 1,616
14 Max Financial Services BUY 695 419
15 Punjab National Bank Reduce 51 59
16 SBI Life Insurance Company BUY 991 840
17 South Indian Bank BUY 20 11
18 State Bank of India BUY 388 254
19 Union Bank of India Reduce 44 52
20 YES Bank Hold 59 43
PL’s Recommendation Nomenclature (Absolute Performance)
Buy : > 15%
Accumulate : 5% to 15%
Hold : +5% to -5%
Reduce : -5% to -15%
Sell : < -15%
Not Rated (NR) : No specific call on the stock
Under Review (UR) : Rating likely to change shortly
583
756
929
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1275
Oct
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17
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18
Oct
- 18
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Oct
- 19
(Rs)
HDFC Bank
October 19, 2019 10
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