Multi Baggers
HDFC Bank
BSE ID : 500180 NSE ID : HDFCBANK
RECOMMENDED PRICE 2308.65
PEAK FROM RECO 1757.80 -23.86%
CURRENT PRICE 1509.40 Resource id #18
The Bank`s total income for the quarter ended March 31, 2019 at Rs 31,204.5 crore grew by 22.1% from Rs 25,549.7 crore for the quarter ended March 31, 2018. Hence on the back of healthy balance sheet & strong growth parameters, we find bank a suitable candidate for long term investment. Hence, we recommend ``Buy`` on the stock with price target of Rs 2650(appreciation of almost 15%) for long term investment.
The Bank’s total income for the quarter ended March 31, 2019 at Rs 31,204.5 crore grew by 22.1% from Rs 25,549.7 crore for the quarter ended March 31, 2018. Net interest income (interest earned less interest expended) for the quarter ended March 31, 2019 grew by 22.8% to Rs 13,089.5 crore, from Rs 10,657.7 crore for the quarter ended March 31, 2018, driven by average asset growth of 19.8% and a core net interest margin for the quarter of 4.4%.The core cost-to-income ratio for the quarter was at 40.1% as against 40.6% for the corresponding quarter ended March 31, 2018. Bank earned a net profit of Rs 5,885.1 crore, an increase of 22.6% over the quarter ended March 31, 2018.
The bank’s balance sheet was healthy as total balance sheet size as of March 31, 2019 was Rs 1,244,541 crore as against Rs 1,063,934 crore as of March 31, 2018. Bank’s total deposits as of March 31, 2019 were Rs 923,141 crore, & witnessed and healthy increase of 17.0% over March 31, 2018. The Bank’s continuing focus on deposits helped in the maintenance of a healthy liquidity coverage ratio at 118%, well above the regulatory requirement. Bank’s total advances as of March 31, 2019 were Rs 819,401 crore, an increase of 24.5% over March 31, 2018. Domestic advances grew by 24.6% over March 31, 2018. As per regulatory [Basel 2] segment classification, domestic retail loans grew by 19.0% and domestic wholesale loans grew by 31.9%. The domestic loan mix as per Basel 2 classification between retail wholesale was 54:46. Overseas advances constituted 3% of total advances.
For the year ended March 31, 2019, the Bank earned a total income of Rs 116,597.9 crore. Net revenues (net interest income plus other income) for the year ended March 31, 2019 were Rs 65,869.1 crore, up by 19.1% over Rs 55,315.2 crore for the year ended March 31, 2018. The core net interest margin for the year ended March 31, 2019 was 4.3%. The core cost to income ratio for the year ended March 31, 2019 was at 39.9%, as against 41.7% for the year ended March 31, 2018. The Bank’s net profit for the year ended March 31, 2019 was Rs 21,078.1 crore, up 20.5% over the year ended March 31, 2018.
The bank is currently trading at 4.21x of book value of Rs 547.54 while it is trading at 3.68x of FY20E book value & 3.17xof FY21E book value. Bank has posted strong numbers in FY19 & Q4FY19. Bank has successfully maintain its margins while its asset quality has shown marginal improvement. Also, bank’s deposits has maintained healthy growth. Hence on the back of healthy balance sheet & strong growth parameters, we find bank a suitable candidate for long term investment. Hence, we recommend ``Buy`` on the stock with price target of Rs 2650(appreciation of almost 15%) for long term investment.
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Disclaimer & Disclosure: This document is prepared for our clients only, on the basis of publicly available information and other sources believed to be reliable. Whilst we are not soliciting any action based on this information, all care has been taken to ensure that the facts are accurate, fair and reasonable. This information is not intended as an offer or solicitation for the purchase or sell of any financial instrument and at any point should not be considered as an investment advice. Reader is requested to rely on his own decision and may take independent professional advice before investing. Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited, Directors and any of its employees shall not be responsible for the content. The person accessing this information specifically agrees to exempt Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and further agrees to hold Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The companies and its affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities there of, company (ies) mentioned herein and the same have acted upon or used the information prior to, or immediately following the publication.
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