MOSL: HDFC BANK (Buy)-Stellar performance on all fronts
​HDFC Bank: Stellar performance on all fronts
(HDFCB IN, Mkt Cap USD47.5b, CMP INR1735, TP INR2000, 15% Upside, Buy)
- HDFCB's 1QFY18 PAT grew 20% YoY (2% miss) to INR38.9b, driven by 29% YoY PPoP growth (3% beat), partly offset by provisions. HDFCB delivered robust loan growth, strong cost control, QoQ improvement in margins and best-in-class asset quality.
- Loans grew 5% QoQ and 23% YoY to INR5.81t. Incremental growth in 1QFY18 was driven by retail loans (75% incremental share; 66% of overall loans). In retail loans (+3.5% QoQ, +25% YoY), the main drivers were business banking/personal loans, which grew 8%/11% QoQ and 27%/37% YoY.
- Fee income picked up in the quarter (+30% YoY). However, adjusted for one-off fee income from OMCs and exceptionally strong credit card sales, fee income growth came in at ~18%-20%.
- CASA growth was strong at 29% YoY, led by 26% YoY SA growth and 34% YoY CA growth. CASA ratio stood at 44%, down 400bp from one-off high of 48% in 4QFY17.
- Asset quality stays robust, with NSL at 54bp. However, HDFCB incurred increased provisioning for NPAs resulting from farm loan waivers and also from additional provisions created against stressed sectors.
HDFC Bank is a commercial banking group based in India. Co. is engaged in providing banking and financial services. Co.'s operations are organized along four segments: Treasury, which includes its investment operations; Retail Banking, which serves retail customers with deposit products, loans and other services through a branch network and other delivery channels; Wholesale Banking, which provides loans, non-fund facilities and transaction services to corporations, public sector units, government bodies, and medium scale enterprises; and Other Banking Business, which includes para banking activities such as credit cards and debit cards.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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