Maintain 'hold' on HDFC Bank – TP Rs.675 - Geojit BNP Paribas

- 'Hold' rating is maintained on HDFC Bank with an increased target price of Rs.675 over one year. Currently the stock is traded at Rs.630 range.

- Core performance remained strong in 2QFY13. Main positives are continued improvement in asset quality and higher than industry loan growth at 22.9% yoy and 8.6%qoq.

- Peers are reeling under growth and asset quality pressures but HDFC Bank outperforms in all counts.

- GNPA declined from 0.97% to 0.91%.

- Retail loan growth remains strong as the bank has now started to leverage its extensive branch network to optimally distribute its retail product offerings and in some cases to completely new regions.

- At the TP, HDFC Bank would trade at 3.7 times of its FY13 adjusted book value.

- The valuation is at premium to peers' valuation but it looks fair given lower risks on asset quality and earnings coupled with higher Tier 1capital at 11.4%.

- Downside risk to the target price is higher retail slippages.

- CASA continues to remain healthy at 46%.

- Added 56 branches during 2QFY13 totaling 2620.

Source : Equity Bulls

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