HDFC Bank reported its quarterly results – The profit growth is a mix of steady margins (4.2%), a late quarter growth surge (10% QoQ), and robust fee income growth (+29%), backed by strong trading gains. Bottom line – earnings and the balance sheet, and their drivers/constituents, have recorded a strong quarter.
Asset deterioration has eased. Loan growth has been strong at quarter end (largely corporate, slack retail) and management sees more upside than downside risks. Here is what various well known brokerages who are active in the HDFC Bank Counter have to say about it.
RBS [Royal Bank of Scotland] – Expects EPS of 62 and 73 for fy10 and fy11 with target price of 1312.
Citi – Expects EPS of 64 and 81 for fy10 and fy11 with target price of 1785.
Emkay share – Expects EPS of 66 and 88 for fy10 and fy11 with target price of 1500.
HSBC – Expects EPS of 70 and 94 for fy10 and fy11 with target price of 1997. [We got a Big Bull on HDFc Bank here]
Macquarie – Expects EPS of 67 and 88 for fy10 and fy11 with target price of 1635.
SBI Securitiess – Expects EPS of 65 and 83 for fy10 and fy11 with target price of 1525.
This Bank has historically traded at the highest P/E amongst Indian Banking Stocks. Avoid fresh exposure at current levels.