HDFC Limited demonstrated one more quarter of strong performance with reported earnings at INR 15.5bn; substantially above our estimates of INR 14.1bn (consensus estimates at INR 14.8bn) on back of strong traction in NII income. Continued buoyancy in loan growth, strong operating efficiency and pristine asset quality were the key positives that emerged from the results.
Valuation & Outlook
At the CMP of INR 886, HDFC is trading at 4.3x FY15e P/BV and 21.1x FY15e P/E which continues to remain tad expensive given the near term challenges. Therefore, we maintain our HOLD recommendation on the stock with a target price of INR 840/share and roll over our earnings estimates to FY15e.
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