KR Choksey's research report on HDFC Bank
Net Interest Income (NII) for Q2FY23 stood at INR 2,10,212 Mn, a growth of 18.9% YoY/ 7.9% QoQ led by robust growth in advances and improvement in yields. The Core NIMs were stable at 4.1% in Q2FY23, an improvement of 10 bps QoQ. Pre-Provision Operating Profits (PPOP) grew 10.0% YoY/ 15.3% QoQ at INR 1,73,922 Mn. Provisions for Q2FY23 were at INR 32,401 Mn as against INR 39,247 Mn in Q2FY22. The credit cost for Q2FY23 stood at 0.87% vs 0.91% in Q1FY23 and 1.30% in Q2FY22. Net Profit stood at INR 1,06,058 Mn, an increase of 20.1% YoY/ 15.3% QoQ. The GNPA were 1.23% as of September 30, 2022, vs a comparable 1.35% as of September 30, 2021. NNPA for the quarter ended stood at 0.33% vs 0.50% as of September 30, 2021, of the net advances. Advances as of September 30, 2022, were at INR 1,47,98,732 Mn, a growth of 23.4% YoY/ 6.1% QoQ. The deposit grew by 19.0% YoY/ 4.3% QoQ at INR 1,67,34,080 Mn.
Outlook
We maintain our target price at INR 1,836 per share (unchanged), implying a P/ABV multiple of 3.4x to the adjusted book value of INR 536 per share, showing an upside of 27.0% over the CMP. Accordingly, we reiterate our BUY rating on the shares of HDFC Bank Ltd.
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