BROKING | DEPOSITORY | DISTRIBUTION | FINANCIAL ADVISORY|MERCHANT BANKING HDFC BANK LTD Stock Report Date 08 th May 2019 BSE Code 500180 NSE Code HDFC BANK Market Cap (Rs Cr) 629117.31 52 week High/Low 2376.00/1884.40 Industry Bank-Private Face Value Rs 2/Share Shares O/S (In No) 272.50 Cr EPS 77.35 Book Value 547.54 P/E 29.85 P/B 4.21 Shareholding Pattern as on Mar’ 2019 Research Analyst : Astha Jain The Bank’s total income for the quarter ended March 31, 2019 at Rs 31,204.5 crore grew by 22.1% from Rs 25,549.7 crore for the quarter ended March 31, 2018. Net interest income (interest earned less interest expended) for the quarter ended March 31, 2019 grew by 22.8% to Rs 13,089.5 crore, from Rs 10,657.7 crore for the quarter ended March 31, 2018, driven by average asset growth of 19.8% and a core net interest margin for the quarter of 4.4%.The core cost-to-income ratio for the quarter was at 40.1% as against 40.6% for the corresponding quarter ended March 31, 2018. Bank earned a net profit of Rs 5,885.1 crore, an increase of 22.6% over the quarter ended March 31, 2018. The bank’s balance sheet was healthy as total balance sheet size as of March 31, 2019 was Rs 1,244,541 crore as against Rs 1,063,934 crore as of March 31, 2018. Bank’s total deposits as of March 31, 2019 were Rs 923,141 crore, & witnessed an healthy increase of 17.0% over March 31, 2018. The Bank’s continuing focus on deposits helped in the maintenance of a healthy liquidity coverage ratio at 118%, well above the regulatory requirement. Bank’s total advances as of March 31, 2019 were Rs 819,401 crore, an increase of 24.5% over March 31, 2018. Domestic advances grew by 24.6% over March 31, 2018. As per regulatory [Basel 2] segment classification, domestic retail loans grew by 19.0% and domestic wholesale loans grew by 31.9%. The domestic loan mix as per Basel 2 classification between retail:wholesale was 54:46. Overseas advances constituted 3% of total advances. For the year ended March 31, 2019, the Bank earned a total income of Rs 116,597.9 crore. Net revenues (net interest income plus other income) for the year ended March 31, 2019 were Rs 65,869.1 crore, up by 19.1% over Rs 55,315.2 crore for the year ended March 31, 2018. The core net interest margin for the year ended March 31, 2019 was 4.3%. The core cost to income ratio for the year ended March 31, 2019 was at 39.9%, as against 41.7% for the year ended March 31, 2018. The Bank’s net profit for the year ended March 31, 2019 was Rs 21,078.1 crore, up 20.5% over the year ended March 31, 2018. Valuation The bank is currently trading at 4.21x of book value of Rs 547.54 while it is trading at 3.68x of FY20E book value & 3.17xof FY21E book value. Bank has posted strong numbers in FY19 & Q4FY19. Bank has successfully maintain its margins while its asset quality has shown marginal improvement. Also, bank’s deposits has maintained healthy growth. Hence on the back of healthy balance sheet & strong growth parameters, we find bank a suitable candidate for long term investment. Hence , we recommend “Buy” on the stock with price target of Rs 2650(appreciation of almost 15%) for long term investment. www.hemsecurities.com For Private Circulation Only HEM RESEARCH BUY CMP 2308.65 TARGET 2650 LONG TERM INVESTMENT Promote r 26% FII 39% Others 35%
Transcript
BROKING | DEPOSITORY | DISTRIBUTION | FINANCIAL ADVISORY|MERCHANT BANKING
HDFC BANK LTD
Stock Report
Date 08th May 2019
BSE Code 500180
NSE Code HDFC BANK
Market Cap (Rs Cr) 629117.31
52 week High/Low 2376.00/1884.40
Industry Bank-Private
Face Value Rs 2/Share
Shares O/S (In No) 272.50 Cr
EPS 77.35
Book Value 547.54
P/E 29.85
P/B 4.21
Shareholding Pattern as on Mar’ 2019
Research Analyst : Astha Jain
The Bank’s total income for the quarter ended March 31, 2019 at Rs 31,204.5 crore grew by 22.1% from Rs 25,549.7 crore for the quarter ended March 31, 2018. Net interest income (interest earned less interest expended) for the quarter ended March 31, 2019 grew by 22.8% to Rs 13,089.5 crore, from Rs 10,657.7 crore for the quarter ended March 31, 2018, driven by average asset growth of 19.8% and a core net interest margin for the quarter of 4.4%.The core cost-to-income ratio for the quarter was at 40.1% as against 40.6% for the corresponding quarter ended March 31, 2018. Bank earned a net profit of Rs 5,885.1 crore, an increase of 22.6% over the quarter ended March 31, 2018. The bank’s balance sheet was healthy as total balance sheet size as of March 31, 2019 was Rs 1,244,541 crore as against Rs 1,063,934 crore as of March 31, 2018. Bank’s total deposits as of March 31, 2019 were Rs 923,141 crore, & witnessed an healthy increase of 17.0% over March 31, 2018. The Bank’s continuing focus on deposits helped in the maintenance of a healthy liquidity coverage ratio at 118%, well above the regulatory requirement. Bank’s total advances as of March 31, 2019 were Rs 819,401 crore, an increase of 24.5% over March 31, 2018. Domestic advances grew by 24.6% over March 31, 2018. As per regulatory [Basel 2] segment classification, domestic retail loans grew by 19.0% and domestic wholesale loans grew by 31.9%. The domestic loan mix as per Basel 2 classification between retail:wholesale was 54:46. Overseas advances constituted 3% of total advances. For the year ended March 31, 2019, the Bank earned a total income of Rs 116,597.9 crore. Net revenues (net interest income plus other income) for the year ended March 31, 2019 were Rs 65,869.1 crore, up by 19.1% over Rs 55,315.2 crore for the year ended March 31, 2018. The core net interest margin for the year ended March 31, 2019 was 4.3%. The core cost to income ratio for the year ended March 31, 2019 was at 39.9%, as against 41.7% for the year ended March 31, 2018. The Bank’s net profit for the year ended March 31, 2019 was Rs 21,078.1 crore, up 20.5% over the year ended March 31, 2018.
Valuation
The bank is currently trading at 4.21x of book value of Rs 547.54 while it is trading at 3.68x of FY20E book value & 3.17xof FY21E book value. Bank has posted strong numbers in FY19 & Q4FY19. Bank has successfully maintain its margins while its asset quality has shown marginal improvement. Also, bank’s deposits has maintained healthy growth.
Hence on the back of healthy balance sheet & strong growth parameters, we find bank a suitable candidate for long term investment. Hence , we recommend “Buy” on the stock with price target of Rs 2650(appreciation of almost 15%) for long term investment.
www.hemsecurities.com
For Private Circulation Only HEM RESEARCH
BUY CMP 2308.65 TARGET 2650 LONG TERM INVESTMENT
Promoter 26%
FII 39%
Others35%
HDFC BANK LTD
BROKING | DEPOSITORY | DISTRIBUTION | FINANCIAL ADVISORY|MERCHANT BANKING
www.hemsecurities.com
As of March 31, 2019, the Bank’s distribution network was at 5,103 banking outlets and 13,160
ATMs across 2,748 cities / towns as against 4,787 banking outlets and 12,635 ATMs across 2,691
cities / towns as of March 31, 2018. Of the total banking outlets, 53% are in semi-urban and rural
areas. Number of employees were at 98,061 as of March 31, 2019 (as against 88,253 as of March 31,
2018)
HDFC Securities Limited (HSL) is amongst the leading retail broking firms in India. As on March
31, 2019, the Bank held 97.3% stake in HSL. For the year ended March 31, 2019, HSL’s total income
was Rs 782.1 crore as against 800.1 crore for the year ended March 31, 2018. Profit after tax before
other comprehensive income for the year was Rs 329.8 crore, as against Rs 344.7 crore in the
previous year. As on March 31, 2019 HSL had 278 branches across 165 cities / towns in the country.
HDB Financial Services Limited (HDBFSL) is a non-deposit taking non-bank finance company
(‘NBFC’) offering wide range of loans and asset finance products to individuals, emerging businesses
and micro enterprises. As on March 31, 2019, the Bank held 95.5% stake in HDBFSL. As on March 31,
2019, HDBFSL’s balance sheet size was at Rs 56,540 crore. The gross loan book grew by 23.6% to Rs
54,709 crore as on March 31, 2019 (as against Rs 44,268 crore as of March 31, 2018). For the year
ended March 31, 2019, HDBFSL’s net interest income grew by 17.2% to Rs 3,378.8 crore (as against
Rs 2,882.2 crore in the previous year). Profit after tax before other comprehensive income for the
year ended March 31, 2019 was Rs 1,153.2 crore compared to Rs 933.0 crore in the previous year, a
growth of 23.6%. As on March 31, 2019, HDBFSL had 1,350 branches across 981 cities / towns.
Gross impaired loans were at 1.8% of gross loans and net impaired loans were at 1.3% of net loans
as on March 31, 2019. Total CAR was at 17.9% with Tier-I CAR at 12.8%.
For Private Circulation Only HEM RESEARCH
\
4500
4600
4700
4800
4900
5000
5100
5200
Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19
47344787
4804 4825
4963
5103
No of Branches
46%
54%
Domestic Loan Mix
Wholesale Retail
47%53%
Banking Units Mix
Metro & Urban Semi Urban & Rutal
HDFC BANK LTD
BROKING | DEPOSITORY | DISTRIBUTION | FINANCIAL ADVISORY|MERCHANT BANKING
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Adequately Capitalised The Bank’s total Capital Adequacy Ratio (CAR) as per Basel III guidelines was at 17.1% as on March 31, 2019 (14.8% as on March 31, 2018) as against a regulatory requirement of 11.025% which includes Capital Conservation Buffer of 1.875%, and an additional requirement of 0.15% on account of the Bank being identified as a Domestic Systemically Important Bank (D-SIB). Tier 1 CAR was at 15.8% as of March 31, 2019 compared to 13.2% as of March 31, 2018. Common Equity Tier 1 Capital ratio was at 14.9% as of March 31, 2019. Risk-weighted Assets were at Rs 931,930 crore (as against Rs 800,126 crore as at March 31, 2018) Strong Deposits Bank’s total deposits as of March 31, 2019 were Rs 923,141 crore, an increase of 17.0% over March 31, 2018. CASA deposits of bank grew by 14.0% with savings account deposits at Rs 248,700 crore and current account deposits at Rs 142,498 crore. Bank’s Time deposits were at Rs 531,943 crore, an increase of 19.4% over the previous year, resulting in CASA deposits comprising 42.4% of total deposits as of March 31, 2019. The Bank’s continuing focus on deposits helped in the maintenance of a healthy liquidity coverage ratio at 118%, well above the regulatory requirement. Total advances as of March 31, 2019 were Rs 819,401 crore, an increase of 24.5% over March 31, 2018. Domestic advances grew by 24.6% over March 31, 2018. As per regulatory [Basel 2] segment classification, domestic retail loans grew by 19.0% and domestic wholesale loans grew by 31.9%. The domestic loan mix as per Basel 2 classification between retail:wholesale was 54:46. Overseas advances constituted 3% of total advances.
Improving Asset Quality Bank’s Gross non-performing assets were at 1.36% of gross advances as on March 31, 2019, as against 1.38% as on December 31, 2018 and 1.30% as on March 31, 2018. Coverage ratio as on March 31, 2019 was 71%. Net non-performing assets were at 0.4% of net advances as on March 31, 2019. The Bank held floating provisions of Rs 1,451 crore as on March 31, 2019. Total provisions (comprising specific provisions, general provisions and floating provisions) were 117% of the gross non-performing loans as on March 31, 2019.
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1.29 1.3 1.33 1.33 1.38 1.36
0.44 0.4 0.41 0.4 0.42 0.39
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19
GNPA % & NNPA %
%GNPA %NNPA
0.00
10.00
20.00
30.00
40.00
50.00
Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19
15.50 14.80 14.6017.10 17.30 17.10
43.90 43.50 41.70 42.00 40.71 42.40
CAR % & CASA %
CAR% CASA%
HDFC BANK LTD
BROKING | DEPOSITORY | DISTRIBUTION | FINANCIAL ADVISORY|MERCHANT BANKING
www.hemsecurities.com
Advances 31 Mar-18 31-Dec-18 31-Mar-19 Auto 76,427 83,012 80,675 Personal Loans 71,876 88,803 92,978 Home Loans 36,257 51,786 51,359 Business Banking 54,126 55,706 57.035 Kisan Gold Card 34,671 35,137 38,723 Credit Cards 36,115 44,839 46,630 CV/CE 23,391 27,166 28.730 Others 14,073 17,407 18,113 Two Wheelers 8,672 10,095 10,047 Gold Loans 5,065 5,161 5,187 Loan Against Securities 1,816 1,788 1,881 Total 3,62,488 4,20,901 4,31,357
For Private Circulation only HEM RESEARCH
27.09
20.15 19.57
24.17
0.00
5.00
10.00
15.00
20.00
25.00
30.00
0.00
100000.00
200000.00
300000.00
400000.00
500000.00
600000.00
700000.00
800000.00
900000.00
1000000.00
FY16 FY17 FY18 FY19
Advances (in Rs Cr) & Growth %
Advances Growth %
21.23
17.82
22.58
17.01
0.00
5.00
10.00
15.00
20.00
25.00
0.00
200000.00
400000.00
600000.00
800000.00
1000000.00
FY16 FY17 FY18 FY19
Deposits (In Rs Cr) & Growth %
Deposits Growth %
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HDFC BANK LTD
P&L A/c
Rs Cr
Particulars FY17 FY18 FY19 FY20E FY21E
Total Income 81602.46 95461.66 116597.92 139917.50 167901.00
Growth % 16.98 22.14 20.00 20.00
Total Exp 55870.07 62836.87 76848.20 90946.38 109135.65
Pre Prov Profit 25732.39 32624.79 39749.72 48971.12 58765.35
JAIPUR OFFICE: 203-204, JAIPUR TOWERS, M I ROAD, JAIPUR-302001 PHONE- 0091 141 405 1000 FAX- 0091 141 510 1757
GROUP COMPANIES
HEM FINLEASE PRIVATE LIMITED
MEMBER-NSE
HEM MULTI COMMODITIES PRIVATE LIMITED
MEMBER-NCDEX, MCX
HEM FINANCIAL SERVICES LIMITED
NBFC REGISTERED WITH RBI
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The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Disclosure of Interest Statement
1. Analyst Ownership of the stock No
2. Hem & its group companies ownership of stock Yes
3. Hem & its group companies director ownership of stock No
4. Broking relationship with the company covered No
