Apna Sapna Money, Money - HDFC Bank

HDFC Bank was recommended by us as part of our cover story (Issue No. 6 dated Mar 2-15, 2009) on banking sector. It was recommended at the price of Rs 864.15 on the basis of its strong valuations and fundamentals. The counter has performed according to our expectations and is currently is trading at Rs 1,189.10 giving gain of 38 per cent from our recommended price.
HDFC Bank is one of the strongest private sector banks in India and has continuously posted good results. This is evident from the bank’s latest results (Q4FY09), where net profit for the bank increased to Rs 631 crore from of Rs 471.11 crore it posted during the same period last year, giving gain of 34 per cent. Net interest income also increased to Rs 1852 crore from Rs 1642.1 crore it posted last year same quarter. At the end of Q4FY09, capital adequacy ratio of bank stands at 15.1 per cent which is way above the recommended level of nine per cent by RBI. This is because bank raised Rs 797 crore towards Tier –II capital in the month of March’ 09. All this has attracted interest of institutional investors in the bank and has witnessed their stake growing in the last couple of quarters. Institutional investors have increased their shareholding in the bank from 36 per cent at the end of September’08 quarter to 39.56 per cent at the end of FY09.
We believe that the bank will continue its superb performance even in future but, as of now, since the bank has already come out with its Q4FY09 results and RBI has also cut its rates, we feel that news has been discounted in the price hence we recommend investors to book partial profits.