X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
HDFC Bank: Mr Dependable - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jul 14, 2003

    HDFC Bank: Mr Dependable

    HDFC Bank has reported its June quarter results that are more or less in line with expectations. The bank has witnessed a strong 22% YoY growth in topline which has led to an even stronger 30% growth in its bottomline in the same period. Bottomline growth has also been aided by other income. Favorable interest rate scenario has helped the bank bring down interest expenses. This in turn, has led to an improvement in operating margins. The bank continues to show consistency in its performance.

    (Rs m) 1QFY03 1QFY04 Change
    Income from operations 4,792 5,845 22.0%
    Other Income 813 1,327 63.2%
    Interest expense 2,907 2,994 3.0%
    Net interest income 1,885 2,851 51.2%
    Other expenses 1,202 1,935 61.0%
    Operating Profit 683 915 34.0%
    Operating Profit Margin (%) 14.3% 15.7%  
    Provisions and contingencies 346 665 92.1%
    Profit before Tax 1,150 1,578 37.2%
    Tax 326 505 54.9%
    Profit after Tax/(Loss) 824 1,073 30.2%
    Net profit margin (%) 17.2% 18.4%  
    No. of Shares (m) 281.4 283.2  
    Diluted Earnings per share (Rs)* 11.6 15.2  
    P/E Ratio (x)   18.7  
    *(annualised)      

    As has been seen before, HDFC Bank's strong performance in the June quarter is the result of strong growth in the advances. While overall advances (customer assets) of the company have risen by a strong 43% YoY, retail advances have grown at a faster rate of 133% in the same period. Retail assets account for 31% (22% in June quarter last year) of total advances currently. For FY04, we have assumed an advances growth of 35% for HDFC Bank.

    There has been a significant improvement in the bank's net interest margin in the June quarter. Going forward, further improvement in net interest margins looks difficult. With competition increasing manifold and interest rate on loans showing a decline, margins could come under pressure.

    The bank has managed to improve its operating margins. A hallmark of HDFC Bank's performance over the years has been its low NPA levels. At the end of June quarter, Net NPA to advances ratio stood at 0.3%. This has been achieved by strong provisioning during the quarter. We have assumed net NPAs to advances ratio of 0.2% for the bank in FY04.

    At the current market price of Rs 284, HDFC Bank is trading at a P/E multiple of 18x its annualised 1QFY04 earnings. The bank has historically traded at a premium compared to private sector peers in light of its high productivity ratios and good asset quality. While growth prospects are promising, much of it already seems to be reflected in current valuations.

    HDFC Bank's stock has run up in the recent past due to speculation of a possible take over of UTI Bank. However, both the banks' have denied the same.

     

     

    Equitymaster requests your view! Post a comment on "HDFC Bank: Mr Dependable". Click here!

      
     

    More Views on News

    HDFC Bank: Asset Quality Deteriorates due to Farm Loan Waiver (Quarterly Results Update - Detailed)

    Jul 25, 2017

    Asset quality was under pressure on account of farm loan waivers. Despite the higher provisioning, the company reported a healthy profit growth of 20%.

    HDFC Bank: Solid Performance Amidst a Difficult Environment (Quarterly Results Update - Detailed)

    May 3, 2017

    Personal Loans and Credit Cards help HDFC bank report a robust set of numbers over the fourth quarter and for the financial year 2017.

    HDFC Bank: Growth Stumbles Post Demonetisation (Quarterly Results Update - Detailed)

    Jan 30, 2017

    HDFC Bank declared the results for the third quarter of financial year ending March 2017 (3QFY17). The bank has reported 18% YoY and 15% YoY growth in net interest income and net profits respectively in 3QFY17.

    IDFC Bank: Strong Trading Income Shields Credit Slowdown (Quarterly Results Update - Detailed)

    Aug 10, 2017

    IDFC Bank is taking steps to address contracting NIMs and successfully transition in to a retail bank.

    ICICI Bank: Loan Slippages Trending Downwards (Quarterly Results Update - Detailed)

    Aug 10, 2017

    Asset quality will be the key thing to watch out for going forward.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    HDFC BANK SHARE PRICE


    Aug 21, 2017 (Close)

    TRACK HDFC BANK

    • Track your investment in HDFC BANK with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    HDFC BANK 8-QTR ANALYSIS

    Detailed Quarterly Results With Charts

    COMPARE HDFC BANK WITH

    MARKET STATS