Buy HDFC Bank, target Rs 2,420: Anand Rathi

HDFC Bank is an Indian banking and financial services company headquartered in Mumbai, Maharashtra and has a presence in Bahrain,

Hong Kong and Dubai. HDFC Bank is India’s largest private sector lender by assets.

HDFC Bank provides a number of products and services including wholesale banking, retail banking, treasury, auto loans, two wheeler loans,

personal loans, loans against property, consumer durable loan, lifestyle loan and credit cards.

HDFC Bank reported steady Q2FY19 operational performance. NIM expanded ~10 bps QoQ and was flat YoY at 4.3%. Core fee income growth

at 26% YoY continued to remain strong deriving strength from retail fees including cards, third-party insurance, other retail and cash management.

Bank has continued to gain market share in key businesses led by digital sourcing and deeper penetration improving product delivery and

cost control which has led the bank to reach historic low C/I of 39.9% in Q2FY19.

HDFC Bank has raised Rs240bn of fresh equity in H1FY19, which will support its loan growth in the coming years.
Further, we expect HDFC Bank to be a major gainer of the current crisis in the NBFC space as it has best-in-class liability franchises along with

superior customer outreach across business segments.
Backed by the robust underwriting skills & prudence and the consistent track record of growth and profitability, HDFC Bank is our top pick

amongst the private sector banks.
At CMP the stock is trading at 3.8x FY19E book value and 3.1x FY20E book value. We recommend buy with a target price of Rs 2,420 per share.