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HDFC Bank-RU4QFY2011-190411

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					                                                                                                4QFY2011 Result Update | Banking
                                                                                                                          April 19, 2011



    HDFC Bank                                                                                 ACCUMULATE
                                                                                              CMP                                `2,348
    Performance Highlights                                                                    Target Price                       `2,671
 
Particulars (` cr)     4QFY11      3QFY11        % chg (qoq)      4QFY10      % chg (yoy)     Investment Period            12 Months
NII                      2,839       2,777               2.3        2,351           20.8
                                                                                              Stock Info
Pre-prov. profit          2,097       2,073               1.2       1,694           23.8
                          1,115       1,088               2.5        837            33.2      Sector                              Banking
PAT
Source: Company, Angel Research                                                               Market Cap (` cr)                  1,09,237

For 4QFY2011, HDFC Bank reported healthy 33.2% yoy growth in net profit to                    Beta                                    1.0
`1,115cr, in line with our estimate of `1,110cr. The bank continued to maintain               52 Week High / Low          2,518/1,785
healthy operating performance with strong profitability growth. We maintain our               Avg. Daily Volume                   74,384
Accumulate recommendation on the stock.                                                       Face Value (`)                          10

Consistently healthy performance on all parameters: Overall business growth of                BSE Sensex                          19,122
the bank was healthy for 4QFY2011 despite a typical fourth quarter slowdown in                Nifty                                5,741
advances. The bank was able to maintain its reported NIM at 4.2% despite the                  Reuters Code                       HDBK.BO
rising cost of funds for the system as a whole. Over the past few quarters, the               Bloomberg Code               HDFCB@IN
bank has been witnessing a slowdown in saving account deposit growth, which
came down to 27.2% in 4QFY2011 from 42.8% in 4QFY2010. Despite this, the
bank’s CASA ratio remained the best in the industry at 52.7% (51% after adjusting             Shareholding Pattern (%)
for one-offs). The asset quality continued to improve substantially with slippages            Promoters                              23.4
halving from 2.6% in FY2010 to 1.1% in FY2011 and provisioning expenses to                    MF / Banks / Indian Fls                11.6
average assets declining to 0.8% in FY2011 from 1.1% in FY2010. NPA coverage                  FII / NRIs / OCBs                      47.2
improved further to 82.5%, even without considering the strong floating                       Indian Public / Others                 17.9
provisions (accounting for over 53.4% of provisioning expenses during the
quarter). The bank currently has an outstanding floating provision pool of
~`730cr, building a cushion against future asset-quality pressures.                           Abs. (%)              3m     1yr        3yr

Outlook and valuation: At the CMP, the stock is trading at 3.2x FY2013E P/ABV,                Sensex                1.3    9.9       14.2
which is below our target multiple of 3.6x (benchmarked at ~25% premium to                    HDFC Bank           13.1    21.3       62.5
our Sensex target multiple). We believe HDFC Bank is well positioned for high
qualitative growth, with CASA and cost-to-income ratio returning to pre-CBoP
levels. In our view, with strong capital adequacy and healthy branch expansion,
the bank is set to further gain credit and CASA market share accompanied by
reduction in NPA provision costs. We maintain our Accumulate recommendation
on the stock with a target price of `2,671.
Key financials
Y/E March (` cr)                    FY2010         FY2011          FY2012E       FY2013E
NII                                  8,387         10,544           12,957         16,177
% chg                                  13.0           25.7             22.9          24.9
Net profit                           2,949           3,926            5,134         6,731
% chg                                  31.3           33.2             30.8          31.1
NIM (%)                                 4.3             4.4             4.4            4.3   Vaibhav Agrawal
EPS (`)                                64.4           84.4            110.4         144.7    022 – 3935 7800 Ext: 6808

P/E (x)                                36.4           27.8             21.3          16.2    vaibhav.agrawal@angelbroking.com

P/ABV (x)                               5.0             4.3             3.7            3.2
                                                                                             Shrinivas Bhutda
RoA (%)                                 1.5             1.6             1.6            1.7
                                                                                             022 – 3935 7800 Ext: 6845
RoE (%)                                16.1           16.7             18.8          21.1    shrinivas.bhutda@angelbroking.com
Source: Company, Angel Research

Please refer to important disclosures at the end of this report                                                                        1
                                                        HDFC Bank | 4QFY2011 Result Update



                 Exhibit 1: 4QFY2011 performance
                 Particulars (` cr)                4QFY11 3QFY11 % chg (qoq) 4QFY10 % chg (yoy)
                 Interest earned                    5,469     5,230         4.6      4,053      34.9
                 - on Advances / Bills              4,151     3,950         5.1      3,031      36.9
                 - on investments                   1,297     1,226         5.8      1,008      28.6
                 - on balance with RBI & others        19          52     (64.0)       12       51.4
                 - on others                            2           2      17.6         1       84.6
                 Interest Expended                  2,629     2,453         7.2      1,702      54.5
                 Net Interest Income                2,839     2,777         2.3      2,351      20.8
                 Other income                       1,256     1,128        11.3       904       39.0
                 Other income excl. treasury        1,247     1,159         7.7       951       31.2
                 - Fee & commission income          1,001         943       6.1       813       23.2
                 - Treasury income                      9         (31)      NA        (47)       NA
                 - Forex & derivative income          245         217      13.2       180       36.3
                 Operating income                   4,095     3,905         4.9      3,255      25.8
                 Operating expenses                 1,998     1,832         9.1      1,561      28.1
                 - Employee expenses                  733         725       1.1       597       22.8
                 - Other Opex                       1,265     1,107        14.3       963       31.3
                 Pre-provision Profit               2,097     2,073         1.2      1,694      23.8
                 Provisions & Contingencies           431         466      (7.4)      440       (1.9)
                 - Floating and NPA Provisions        330         438     (24.6)      323        2.3
                 - Other Provisions                   101          28     262.0       117     (13.6)
                 PBT                                1,666     1,607         3.7      1,254      32.8
                 Provision for Tax                    551         519       6.1       418       31.8
                 PAT                                1,115     1,088         2.5       837       33.2
                 Effective Tax Rate (%)              33.1         32.3   77bps        33.3   -24bps
                 Source: Company, Angel Research


                 Exhibit 2: 4QFY2011 – Actual vs. estimates
                 Particulars (` cr)                     Actual           Estimates           Var. (%)
                 Net interest income                    2,839               2,878               (1.3)
                 Other income                           1,256               1,056               18.9
                 Operating income                       4,095               3,934                4.1
                 Operating expenses                     1,998               1,893                5.6
                 Pre-prov. profit                       2,097               2,041                2.7
                 Provisions & cont.                         431               427                0.9
                 PBT                                    1,666               1,614                3.2
                 Prov. for taxes                            551               504                9.3
                 PAT                                    1,115               1,110                0.4
                 Source: Company, Angel Research




April 19, 2011                                                                                      2
                                                            HDFC Bank | 4QFY2011 Result Update



                 Exhibit 3: 4QFY2011 performance analysis
                 Particulars                               4QFY11 3QFY11 % chg (qoq) 4QFY10 % chg (yoy)
                 Balance sheet
                 Advances (` cr)                           159,983 159,184        0.5 125,831        27.1
                 Deposits (` cr)                           208,586 192,202        8.5 167,404        24.6
                 Credit-to-Deposit Ratio (%)                  76.7     82.8   -612bps      75.2   153bps
                 Current deposits (` cr)                    46,460   36,024      29.0    37,227      24.8
                 Saving deposits (` cr)                     63,448   61,038       3.9    49,877      27.2
                 CASA deposits (` cr)                      109,908   97,062      13.2    87,104      26.2
                 CASA ratio (%)                               52.7     50.5   219bps       52.0    66bps
                 CAR (%)                                      16.2     16.3    -10bps      17.4   -120bps
                 Tier 1 CAR (%)                               12.2     12.1    10bps       13.3   -110bps
                 Profitability Ratios (%)
                 Reported NIM                                  4.2      4.2     0bps        4.4    -20bps
                 Cost-to-income ratio                         48.8     46.9   188bps       47.9    85bps
                 Asset quality
                 Gross NPAs (` cr)                           1,694    1,782      (4.9)    1,817      (6.7)
                 Gross NPAs (%)                                1.1      1.1     -6bps       1.4    -38bps
                 Net NPAs (` cr)                              296      331     (10.4)      392     (24.4)
                 Net NPAs (%)                                  0.2      0.2     0bps        0.3    -10bps
                 Provision Coverage Ratio (%)                 82.5     81.4   106bps       78.4   409bps
                 LLP & floating prov. to avg. assets (%)       0.5      0.7    -20bps       0.6    -10bps
                 Source: Company, Angel Research


                 Advances growth moderates sequentially in line with
                 historical trend; NIM sustained at 4.2%
                 Growth in net advances of the bank moderated considerably to just ~0.5% qoq
                 (~1.5% after adjusting for sell-downs of ~`1,500cr during the quarter), which is
                 typical of HDFC Bank’s fourth quarter growth strategy. On a yoy basis, the bank’s
                 advances continued to grow (27.1%) at a faster pace than the industry’s growth
                 (~21.4%), leading to credit market share gains.

                 Deposits accretion was strong during the quarter with growth of 8.5% qoq
                 primarily on account of year-end surge in current account deposits (accounting for
                 ~63.7% of incremental deposits). On a yoy basis, deposits growth was healthy at
                 over 24% compared to industry growth of ~16%. CASA deposits continued to be a
                 strong source of funding for the bank, accounting for 54.7% of incremental
                 deposits for FY2011. Saving account deposit growth has been moderating in the
                 recent quarters (down from the peak of 42.8% as of 4QFY2010 to 27.2% as of
                 4QFY2011). However, overall CASA ratio remains the best in the industry at 51%
                 (after adjusting one-offs; 52.7% without adjusting).

                 The bank delivered reasonable growth in other income, as reflected in 23.2% yoy
                 growth in fees and commission income and 36.3% rise in forex and derivative
                 income. The bank was able to sustain its reported NIM at 4.2% sequentially despite
                 rising cost of funds for the system as a whole, primarily on the back of a 120bp
                 hike in its base rate during the quarter. Going forward also, we expect the bank to
                 largely sustain its NIM close to FY2011 levels on the back of its strong funding mix.



April 19, 2011                                                                                       3
                                                                                                                  HDFC Bank | 4QFY2011 Result Update



Exhibit 4: Advances growth moderates                                                         Exhibit 5: Stable margins
  (%)      4QFY10            1QFY11               2QFY11         3QFY11           4QFY11       (%)
 45.0                                                                                          4.5
                                                                                                        4.4

                                                                                                                    4.3
 30.0                                                                                          4.3
                                                                                                                                    4.2            4.2            4.2


 15.0                                                                                          4.1
             27.3

                    42.2

                            38.2

                                    33.1

                                           27.1




                                                          17.2

                                                                 25.6

                                                                        30.4

                                                                               24.2

                                                                                      24.6
    -                                                                                          3.9
                     Advances                                      Deposits                           4QFY10       1QFY11       2QFY11         3QFY11            4QFY11

Source: Company, Angel Research                                                              Source: Company, Angel Research


                                                                        Strong capital adequacy, branch expansion to drive credit and
                                                                        CASA market share gains, respectively

                                                                        The bank’s total capital adequacy ratio (CAR) remained strong at 16.2%, with
                                                                        tier-1 constituting 74.8% of the total CAR. On the back of this strong CAR, we
                                                                        expect the bank to further improve its credit market share over FY2012–13.
                                                                        Accordingly, we expect the bank to record credit growth of 28% each for FY2012
                                                                        and FY2013 compared to 27.1% growth in FY2011.

                                                                        Importantly, the bank’s CASA deposits also grew by 26.2% yoy, driven by 27.2%
                                                                        yoy growth in savings deposits. The strong traction in CASA growth over the past
                                                                        one year can be attributed to the bank’s aggressive branch expansion during
                                                                        FY2009–10 and increasing productivity of CBoP’s branch network. During
                                                                        FY2011, the bank added 261 branches, taking its branch network close to 2,000,
                                                                        which was lower compared to 313 branches opened in FY2010. However, the
                                                                        bank has increased its presence to ~1,000 cities compared to 779 cities as of
                                                                        FY2010. In FY2012, the bank plans to increase its branch network by 12–13% by
                                                                        opening ~250 branches, which appears to be a bit on the lower side.

Exhibit 6: CASA ratio remains strong                                                         Exhibit 7: Branch expansion picks up in 4QFY2011
                           Tier-I CAR (%)           Tier-II CAR (%)                                                 Branches              ATMs (RHS)
 20.0        17.4                                  17.0                                                                                              5,471
                               16.3                                16.3               16.2    2,250                                                                5,750
                                                                                                                                          5,121
             4.1                                                                                                               4,721
 15.0                                              4.3                                        2,000                4,393                                           5,000
                                   3.9                             4.2                4.0                4,232
                                                                                              1,750                                                                4,250
 10.0
                                                                                              1,500                                                                3,500
             13.3              12.4                12.7            12.1               12.2
   5.0
                                                                                                          1,725



                                                                                                                    1,725



                                                                                                                                1,765



                                                                                                                                           1,780



                                                                                                                                                         1,986




                                                                                              1,250                                                                2,750

    -                                                                                         1,000                                                                2,000
          4QFY10            1QFY11                2QFY11         3QFY11           4QFY11                4QFY10 1QFY11 2QFY11 3QFY11 4QFY11

Source: Company, Angel Research                                                              Source: Company, Angel Research




April 19, 2011                                                                                                                                                             4
                                                                                        HDFC Bank | 4QFY2011 Result Update



                                                  Asset quality continues to get better
                                                  The bank has substantially improved its asset quality over the past two years, as
                                                  reflected in the slippages rate declining from over 5% as of FY2009 to 2.6% for
                                                  FY2010 and further to 1.1% for FY2011. Provisions expenses to average assets
                                                  improved to 0.8% for FY2011 from 1.1% in FY2010.

                                                  Even on a quarterly basis, asset quality continued to improve with gross and net
                                                  NPAs declining by 4.9% qoq and 10.4% qoq, respectively. NPA provision coverage
                                                  ratio improved further to 82.5%, even without considering the floating provisions of
                                                  over `730cr. Restructured advances grew by ~34% qoq (from 0.3% of gross
                                                  advances as of 3QFY2011 to 0.4% as of 4QFY2011) to ~`640cr, which included
                                                  the applications received from MFIs for restructuring. The bank has a low ~0.5%
                                                  exposure to MFIs.

                                                  During the quarter, the bank continued to make substantial floating and
                                                  contingent provisions for creating a buffer against future credit risks. The bank
                                                  made floating and contingent provisions of ~`330cr, accounting for over 77% of
                                                  the total provisioning burden during 4QFY2011. The bank has an outstanding
                                                  floating provision pool of ~730cr, building a cushion against future asset-quality
                                                  pressures.

Exhibit 8: Slippages decline materially                             Exhibit 9: Improving asset quality
   (%)                                                                       Gross NPAs (%)       Net NPAs (%)      PCR (Calc, %, RHS)
  6.0                              5.3                                1.5                                                        85.0
                                                                                                                      82.5
                                                                                                             81.4
  5.0                                                                 1.2
  4.0                                                                         78.4                                              80.0
                                                                      0.9                          77.8
                                                                                         77.0
  3.0                   2.5                 2.6
            2.2
                                                                      0.6
  2.0                                                                                                                           75.0
                                                         1.1
  1.0                                                                 0.3
                                                                              1.4
                                                                              0.3


                                                                                         1.2
                                                                                         0.3


                                                                                                   1.2
                                                                                                   0.3


                                                                                                            1.1
                                                                                                            0.2


                                                                                                                     1.1
                                                                                                                     0.2

   -                                                                  0.0                                                       70.0
          FY2007      FY2008      FY2009   FY2010      FY2011               4QFY10     1QFY11    2QFY11    3QFY11   4QFY11

Source: Company, Angel Research                                      Source: Company, Angel Research




April 19, 2011                                                                                                                           5
                                                     HDFC Bank | 4QFY2011 Result Update



                 Investment arguments
                 Strong capital adequacy, expanding network to sustain traction
                 in credit market share and CASA deposits, respectively

                 In 4QFY2011, the bank’s capital adequacy stood at a strong 16.2%, with tier-1
                 comprising a substantial 74.8%. On the back of this strong CAR, we expect the
                 bank to increase its credit market share over FY2012–13. Accordingly, we expect
                 the bank to grow its advances by 28% each in FY2012 and FY2013.

                 The bank’s strong and profitable growth over the last five years (FY2005–10) was
                 supported by significant traction in CASA market share (from 3.3% in FY2005 to
                 5.2% in FY2010). The dominant transaction banking business lies at the core of
                 the bank’s strength in CASA deposits. Moreover, post the merger of CBoP, the
                 bank’s branch network moved up at a 30% CAGR during FY2005–10.
                 We believe HDFC Bank would be in a position to further increase its CASA market
                 share going ahead by increasing CASA mobilisation at the branches, expanding
                 network at a healthy pace and leveraging its comprehensive product range and
                 strong brand.

                 Comprehensive product portfolio,               effective    cross-selling     to
                 sustain traction in fee income

                 Apart from the traditional CEB and forex income, the bank earns substantial fee
                 income from transaction banking, cards and third-party distribution, among
                 others. Overall, the bank’s core fee income increased at a 27.4% CAGR over
                 FY2008–11 and stood at around 1.7% of ATA in FY2011, one of the best in the
                 sector – offering another significant competitive advantage to the bank.

                 Improvement in asset quality

                 The bank has been able to improve its asset quality consistently, as reflected in
                 slippages, which declined from 5.2% in FY2009 to 1.1% during FY2011.
                 Provisions to average assets also declined from 1.2% in FY2009 to 0.8% in
                 FY2011.

                 Outlook and valuation

                 We believe HDFC bank is among the most competitive banks in the sector, with an
                 A-list management at the helm of affairs, which has one of the best track records
                 in the sector. At the CMP, the stock is trading at 3.2x FY2013E P/ABV. We believe
                 the bank is well positioned for high qualitative growth, with the CASA and
                 cost-to-income ratio returning to pre-CBoP levels. HDFC Bank has commanded
                 33.1% premium to the Sensex in terms of its one-year forward P/E multiple over
                 the last five years. We expect the premium to be around its historical average on
                 account of robust growth and RoE prospects over the next two years. We have
                 assigned a multiple of 3.6x FY2013E P/ABV to arrive at a target price of `2,671.
                 We maintain our Accumulate recommendation on the stock.




April 19, 2011                                                                                  6
                                                            HDFC Bank | 4QFY2011 Result Update



                 Exhibit 10: Key assumptions
                                                                    Earlier estimates             Revised estimates
                 Particulars (%)
                                                                    FY2012        FY2013        FY2012      FY2013
                 Credit growth                                        25.0            24.0         28.0           28.0
                 Deposit growth                                       29.0            24.0         28.0           28.0
                 CASA ratio                                           50.0            49.9         50.9           49.2
                 NIMs                                                   4.4             4.4         4.4            4.3
                 Other income growth                                  24.6            25.2         31.0           28.0
                 Growth in staff expenses                             25.0            24.0         25.2           25.2
                 Growth in other expenses                             25.0            24.0         25.2           25.2
                 Slippages                                              1.6             1.3         1.1            1.1
                 Treasury gain/(loss) (% of investments)                0.1             0.1         0.1            0.1
                 Source: Angel Research


                 Exhibit 11: Change in estimates
                                                       FY2012                                 FY2013
                 Particulars (` cr)          Earlier     Revised             Earlier             Revised
                                                                 Var. (%)                                Var. (%)
                                          estimates    estimates          estimates            estimates
                 NII                        13,302       12,957     (2.6)   16,761               16,177     (3.5)
                 Non-interest income         5,088          5,614     10.3        6,372           7,187        12.8
                 Operating income           18,390         18,571      1.0      23,133          23,365            1.0
                 Operating expenses          8,746          8,892      1.7      10,845          11,133            2.7
                 Pre-prov. profit            9,644          9,679      0.4      12,287          12,232        (0.5)
                 Provisions & cont.          2,040          2,070      1.4        2,312           2,257       (2.4)
                 PBT                         7,604          7,609      0.1        9,975           9,975       (0.0)
                 Prov. for taxes             2,433          2,474      1.7        3,192           3,244           1.6
                 PAT                         5,171          5,134     (0.7)       6,783           6,731       (0.8)
                 Source: Angel Research



                 Exhibit 12: Angel EPS forecast vs. consensus
                 Year (`)             Angel forecast                Bloomberg consensus                   Var. (%)
                 FY2012E                    110.4                             109.9                         0.4
                 FY2013E                    144.7                             140.1                         3.3
                 Source: Bloomberg, Angel Research




April 19, 2011                                                                                                       7
                                                                                                                 HDFC Bank | 4QFY2011 Result Update



                 Exhibit 13: P/ABV band
                             Price (`)                                   2.00x                                  2.75x                                3.50x                                   4.25x                               5.00x

                  4,000

                  3,500

                  3,000

                  2,500

                  2,000

                  1,500

                  1,000

                    500

                      0




                                                                                                                            Dec-06
                           Apr-02




                                                                                                                                            Jul-07




                                                                                                                                                                                  Apr-09
                                                                           Aug-04

                                                                                         Mar-05




                                                                                                                                                                                                                                     Aug-11

                                                                                                                                                                                                                                                  Mar-12
                                                                                                      Oct-05
                                     Nov-02




                                                                                                                                                       Feb-08

                                                                                                                                                                       Sep-08



                                                                                                                                                                                               Nov-09
                                                                                                                May-06
                                                  Jun-03




                                                                                                                                                                                                          Jun-10
                                                               Jan-04




                                                                                                                                                                                                                      Jan-11
                 Source: Company, Angel Research


                 Exhibit 14: P/E band
                                                                        Price (`)                               15x                         20x                         25x                         30x
                   3,600

                   3,200

                   2,800

                   2,400

                   2,000

                   1,600

                   1,200

                     800

                     400

                       0
                           Jan-05


                                         Jul-05


                                                             Jan-06


                                                                               Jul-06


                                                                                                  Jan-07


                                                                                                                 Jul-07


                                                                                                                                   Jan-08


                                                                                                                                                     Jul-08


                                                                                                                                                                         Jan-09


                                                                                                                                                                                           Jul-09


                                                                                                                                                                                                          Jan-10


                                                                                                                                                                                                                            Jul-10


                                                                                                                                                                                                                                              Jan-11
                 Source: Company, Angel Research


                 Exhibit 15: HDFC Bank – Premium/Discount to the Sensex
                                                   Premium/Discount to Sensex                                                                                   Avg. Historical Premium
                    90

                    70

                    50

                    30

                    10

                   (10)

                   (30)
                                              Oct-06




                                                                                           Oct-07




                                                                                                                                     Oct-08




                                                                                                                                                                                   Oct-09




                                                                                                                                                                                                                             Oct-10
                                                           Jan-07




                                                                                                       Jan-08




                                                                                                                                                 Jan-09




                                                                                                                                                                                               Jan-10




                                                                                                                                                                                                                                         Jan-11
                                    Jul-06




                                                                                Jul-07




                                                                                                                          Jul-08




                                                                                                                                                                         Jul-09




                                                                                                                                                                                                                   Jul-10
                                                                      Apr-07




                                                                                                                Apr-08




                                                                                                                                                              Apr-09




                                                                                                                                                                                                        Apr-10




                                                                                                                                                                                                                                                    Apr-11
                           Mar-06




                 Source: Bloomberg, Angel Research




April 19, 2011                                                                                                                                                                                                                                             8
                                                                                                   HDFC Bank | 4QFY2011 Result Update



Exhibit 16: Recommendation summary
                                 CMP          Tgt.    Upside     FY2013E           FY2013E       FY2013E        FY11E-13E   FY2013E    FY2013E
Company       Reco.
                                  (`)     price (`)      (%)     P/ABV (x)    Tgt. P/ABV (x)       P/E (x)   EPS CAGR (%)    RoA (%)    RoE (%)
AxisBk        Buy               1,411       1,770       25.5           2.2               2.8         10.7           25.8         1.8      22.7
FedBk         Neutral             453             -         -          1.2                  -         8.7           23.6         1.4      14.5
HDFCBk        Accumulate        2,348       2,671       13.7           3.2               3.6         16.2           30.9         1.7      21.1
ICICIBk*      Buy               1,090       1,405       28.9           2.0               2.6         15.3           25.5         1.5      16.2
SIB           Neutral               23            -         -          1.3                  -         8.4             3.5        0.8      15.0
YesBk         Accumulate          324         343         6.1          2.1               2.3         12.3           12.7         1.2      18.6
BOI           Accumulate          484         541       11.8           1.2               1.4          6.5           19.6         1.0      20.1
CorpBk        Accumulate          627         701       11.8           1.0               1.1          5.7             6.2        1.1      18.3
DenaBk        Accumulate          109         120       10.3           0.8               0.9          5.2           (0.8)        0.8      16.2
IndBk         Buy                 233         269       15.4           0.9               1.1          5.0             7.6        1.4      19.8
IOB           Accumulate          153         170       11.2           0.9               1.1          6.0           25.6         0.8      16.3
J&KBk         Accumulate          820         930       13.4           0.9               1.0          5.8             5.5        1.2      16.1
OBC           Buy                 365         433       18.4           0.8               1.0          5.5             4.6        1.0      15.5
PNB           Buy               1,183       1,388       17.3           1.3               1.6          6.4           15.0         1.2      22.3
SBI*          Buy               2,739       3,479       27.0           1.8               2.2          9.0           30.2         1.2      21.9
UcoBk         Neutral             119             -         -          1.1                  -         6.2             9.4        0.7      20.6
UnionBk       Buy                 335         402       20.1           1.2               1.4          5.9           16.6         1.0      20.7
Source: Angel Research; Note: *Target multiples=SOTP target price/ABV (including subsidiaries)




April 19, 2011                                                                                                                               9
                                                                 HDFC Bank | 4QFY2011 Result Update



                 Income statement
                 Y/E March (` cr)                  FY07     FY08     FY09      FY10     FY11      FY12E    FY13E
                 Net Interest Income           3,710 5,228          7,421     8,387    10,544    12,957    16,177
                 - YoY Growth (%)                  45.7     40.9     42.0      13.0      25.7      22.9      24.9
                 Other Income                  1,510 2,205          3,471     3,811     4,284     5,614     7,187
                 - YoY Growth (%)                  24.4     46.0     57.4       9.8      12.4      31.0      28.0
                 Operating Income              5,220 7,433 10,892            12,197    14,828    18,571    23,365
                 - YoY Growth (%)                  38.8     42.4     46.5      12.0      21.6      25.2      25.8
                 Operating Expenses            2,421 3,746          5,685     5,764     7,102     8,892    11,133
                 - YoY Growth (%)                  43.2     54.7     51.8       1.4      23.2      25.2      25.2
                 Pre - Provision Profit        2,799 3,688          5,207     6,433     7,725     9,679    12,232
                 - YoY Growth (%)                  35.3     31.7     41.2      23.5      20.1      25.3      26.4
                 Prov. & Cont.                 1,160 1,407          1,908     2,144     1,907     2,070     2,257
                 - YoY Growth (%)                  42.4     21.2     35.6      12.4     (11.1)       8.5      9.1
                 Profit Before Tax             1,639 2,281          3,299     4,289     5,819     7,609     9,975
                 - YoY Growth (%)                  30.7     39.2     44.6      30.0      35.7      30.8      31.1
                 Prov. for Taxation                497       691    1,054     1,340     1,892     2,474     3,244
                 - as a % of PBT                   30.3     30.3     32.0      31.3      32.5      32.5      32.5
                 PAT                           1,141 1,590          2,245     2,949     3,926     5,134     6,731
                 - YoY Growth (%)                  31.1     39.3     41.2      31.3      33.2      30.8      31.1



                 Balance sheet
                 Y/E March (` cr)          FY07       FY08         FY09      FY10      FY11      FY12E     FY13E
                 Share Capital              319           354       425       458       465        465       465
                 Reserve & Surplus         6,114     11,143       14,627    21,065    24,914     28,859    34,049
                 Deposits                 68,298 100,769 142,812 167,404 208,586 266,991 341,748
                 - Growth (%)               22.4          47.5      41.7      17.2      24.6       28.0      28.0
                 Borrowings                2,815      4,595        2,686     6,563     7,489      9,460    12,108
                 Tier 2 Capital            3,283      3,449        6,478     6,353     6,905      8,148     9,615
                 Other Liab. & Prov. 10,407          12,867       16,243    20,616    28,993     36,430    50,466
                 Total Liabilities        91,236 133,177 183,271 222,459 277,353 350,353 448,452
                 Cash Balances             5,182     12,553       13,527    15,483    25,101     20,024    25,631
                 Bank Balances             3,971      2,225        3,979    14,459     4,568      8,759    11,211
                 Investments              30,565     49,394       58,818    58,608    70,929     95,688 122,583
                 Advances                 46,945     63,427       98,883 125,831 159,983 204,778 262,116
                 - Growth (%)               33.9          35.1      55.9      27.3      27.1       28.0      28.0
                 Fixed Assets               967       1,175        1,707     2,123     2,171      2,660     3,302
                 Other Assets              3,605      4,403        6,357     5,955    14,601     18,444    23,608
                 Total Assets             91,236 133,177 183,271 222,459 277,353 350,353 448,452
                 - Growth (%)               24.1          46.0      37.6      21.4      24.7       26.3      28.0




April 19, 2011                                                                                                10
                                                 HDFC Bank | 4QFY2011 Result Update



                 Ratio analysis
                 Y/E March                      FY07     FY08   FY09   FY10   FY11 FY12E FY13E
                 Profitability ratios (%)
                 NIMs                             4.7     4.9    4.9    4.3    4.4     4.4    4.3
                 Cost to Income Ratio            46.4    50.4   52.2   47.3   47.9    47.9   47.6
                 RoA                              1.4     1.4    1.4    1.5    1.6     1.6    1.7
                 RoE                             19.5    17.7   16.9   16.1   16.7    18.8   21.1
                 B/S ratios (%)
                 CASA Ratio                      57.7    54.5   44.4   52.0   52.7    50.9   49.2
                 Credit/Deposit Ratio            68.7    62.9   69.2   75.2   76.7    76.7   76.7
                 CAR                             13.1    13.6   13.8   15.7   13.8    12.8   11.9
                 - Tier I                         8.6    10.3    9.3   12.0   10.7     9.9    9.1
                 Asset Quality (%)
                 Gross NPAs                       1.4     1.4    2.0    1.4    0.9     0.8    0.7
                 Net NPAs                         0.4     0.5    0.6    0.3    0.2     0.1    0.1
                 Slippages                        2.2     2.5    5.3    2.6    1.1     1.1    1.1
                 Loan Loss Prov. /Avg. Assets     0.8     0.9    1.0    1.0    0.4     0.4    0.4
                 Provision Coverage              69.2    67.1   68.4   78.4   82.6    81.5   80.5
                 Per Share Data (`)
                 EPS                             35.7    44.9   52.8   64.4   84.4 110.4 144.7
                 ABVPS (75% cover.)             200.2 322.4 350.8 470.2 545.5 630.3 741.9
                 DPS                              7.0     8.5    8.5   12.0   16.5    22.0   28.5
                 Valuation Ratios
                 PER (x)                         65.7    52.3   44.5   36.4   27.8    21.3   16.2
                 P/ABVPS (x)                     11.7     7.3    6.7    5.0    4.3     3.7    3.2
                 Dividend Yield                   0.3     0.4    0.4    0.5    0.7     0.9    1.2
                 DuPont Analysis
                 NII                              4.5     4.7    4.7    4.1    4.2     4.1    4.1
                 (-) Prov. Exp.                   1.4     1.3    1.2    1.1    0.8     0.7    0.6
                 Adj. NII                         3.1     3.4    3.5    3.1    3.5     3.5    3.5
                 Treasury                        (0.1)    0.1    0.3    0.2   (0.0)    0.0    0.0
                 Int. Sens. Inc.                  3.0     3.6    3.7    3.2    3.4     3.5    3.5
                 Other Inc.                       1.9     1.8    1.9    1.7    1.7     1.8    1.8
                 Op. Inc.                         4.9     5.4    5.7    5.0    5.2     5.3    5.3
                 Opex                             2.9     3.3    3.6    2.8    2.8     2.8    2.8
                 PBT                              2.0     2.0    2.1    2.1    2.3     2.4    2.5
                 Taxes                            0.6     0.6    0.7    0.7    0.8     0.8    0.8
                 RoA                              1.4     1.4    1.4    1.5    1.6     1.6    1.7
                 Leverage                        14.0    12.5   11.9   11.1   10.7    11.5   12.5
                 RoE                             19.5    17.7   16.9   16.1   16.7    18.8   21.1




April 19, 2011                                                                                11
                                                                                            HDFC Bank | 4QFY2011 Result Update




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  Disclosure of Interest Statement                                               HDFC Bank
  1. Analyst ownership of the stock                                                 No
  2. Angel and its Group companies ownership of the stock                           No
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  4. Broking relationship with company covered                                      No


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  Ratings (Returns):              Buy (> 15%)                            Accumulate (5% to 15%)                     Neutral (-5 to 5%)
                                  Reduce (-5% to 15%)                    Sell (< -15%)




April 19, 2011                                                                                                                             12

				
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