HDFC Bank's Q4FY15 PAT up 21% QoQ, Motilal Oswal maintains 'Buy'

1. 23 April 2015
4QFY15 Result Update | Sector: Financials
HDFC Bank
Alpesh Mehta (Alpesh.Mehta@MotilalOswal.com); +91 22 3982 5415
Vallabh Kulkarni (Vallabh.Kulkarni@MotilalOswal.com); +91 22 3982 5430
BSE SENSEX S&P CNX
CMP: INR1,014 TP: INR1,350 (+33%) Buy27,735 8,398
Bloomberg HDFCB IN
Equity Shares (m) 2,506.5
M.Cap (INR b)/(USD b) 2,542/40.2
52-Week Range (INR) 1,105/712
1, 6, 12 Rel. Per (%) -2/9/17
Avg Val(INRm)/Vol’000 1941/2141
Free float (%) 78.3
Financials & Valuation (INR Billion)
Y/E Mar 2015 2016E 2017E
NII 224.0 282.8 350.0
OP 174.0 219.2 269.4
NP 102.2 128.4 160.5
NIM (%) 4.6 4.7 4.7
EPS (INR) 40.8 51.2 64.0
EPS Gr. (%) 15.3 25.7 25.0
BV/Sh. (INR) 247.4 286.7 335.8
ABV/Sh. (INR) 243.8 283.3 332.1
RoE (%) 19.4 19.2 20.6
RoA (%) 1.9 2.0 2.0
Payout (%) 23.4 23.4 23.4
Valuations
P/E(X) 24.9 19.8 15.8
P/BV (X) 4.1 3.5 3.0
P/ABV (X) 4.2 3.6 3.1
Div. Yield (%) 0.8 1.0 1.3
In-line performance; healthy growth continues; NSL - lowest in the industry
n HDFC Bank's (HDFCB) 4QFY15 PAT grew 21% YoY (in-line) to INR28b. Stable NIM
(4.4%), improving fee growth (+21% YoY, 9-quarter high) and strong CASA
momentum (+310bp QoQ) were the key highlights of the quarter.
n GNPAs improved by 7bp QoQ to 0.93%. During the quarter, bank sold an large
consortium account to ARC (exposure of ~INR5.5b, system exposure of ~INR350-
400b). HDFCB booked a loss of ~INR2b on the transaction (fully provided in 4Q by
adjusting against floating provisions) and received ~INR400m security receipts.
NSL remains the lowest at 30bp.
n Although retail segment reported improved YoY growth (15.5%, five-quarter
high), its proportion in overall loans declined to 47.3% (19-quarter low), led by
strong growth in the wholesale segment.
n While on a reported basis, CV and CE (-3% QoQ, -11% YoY – an 13-quarter low of
INR128b) and business banking (-12% QoQ,-25% YoY) are the key drag to retail
loan growth, management stated that on a segmental basis (including wholesale-
customer having >INR50m exposure), business banking momentum is healthy
(+17% YoY). CV meanwhile has bottomed out (flat QoQ, +8% YoY).
Valuation and view: HDFCB is best-placed in the current environment, with ~44%
CASA ratio, growth outlook of at least 1.3x industry and least asset quality risk. With
CET1 of ~14%, strong capacity building in the moderate growth cycle (branches at
4,014 v/s 1,412 in FY09) and significant digitalization initiatives, the bank is well
placed to benefit from the expected pick-up in the economic growth cycle. Despite
the recent capital raising, RoE is expected to be ~20%. Comfort on earnings (RoA at
~2%) remains high. Maintain Buy with a target price of INR1,350 (4x FY17E BV).
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

2. 23 April 2015 2
HDFC Bank
Exhibit 1: Quarterly Performance: In-line with estimate
Y/E March 4QFY15A 4QFY15E V/S our Est Comments
Net Interest Income 60,132 60,127 0 Inline performance; NIMs stable QoQ
% Change (Y-o-Y) 21 21
Other Income 25,638 24,197 6 Beat on fees led by higher than expected Forex and trading profits
Net Income 85,769 84,324 2
Operating Expenses 38,550 37,269 3
Operating Profit 47,220 47,055 0 Operating leverage help boost profitability
% Change (Y-o-Y) 25 25
Other Provisions 5,767 4,765 21 Higher than expected NPA provisioning
Profit before Tax 41,453 42,290 -2
Tax Provisions 13,384 14,273 -6
Net Profit 28,069 28,017 0 Higher provisioning compensated by beat on fee income leading to
inline PAT% Change (Y-o-Y) 21 20
Source: MOSL, Company
GNPA improvement led by sale to ARC; OSRL stable QoQ
n In absolute terms, GNPA and NNPA declined by 1% QoQ each. HDFCB sold one
corporate account (of INR 5.5b) which had slipped into NPA during the quarter.
Bank booked a loss of ~INR2b (full provided in 4Q by adjusting against floating
provisions). Thus, gross slippages increased to INR16.3b (annualized slippage
ratio of ~2.2%) vs. ~INR10b in 3QFY15 (based on basel disclosures).
n In percentage terms, GNPA stood at 0.93% (down 7bp QoQ) and NNPA
percentage was at 0.2% (down 10bp QoQ). Restructured standard loan portfolio
(including pipeline) remained stable QoQ at 0.1% of loans and consequently net
stress loans also declined (10bp) QoQ to 30bp.
Retail loans proportion at 18 quarter low; Growth driven by wholesale book
n Reported loans grew 21% YoY and 5% QoQ mainly driven by strong growth in
wholesale segment (+6% QoQ and +26% YoY). As per the management,
sequential growth in retail loans (+5% QoQ) in 4Q continues to remain lower
than the seasonal trend of +7-8% QoQ growth reported in the previous years
(mainly dragged down by CV and CE growth).
n Retail loan portfolio growth was led by strong momentum in Home loans (+21%
QoQ and 25% YoY; higher buy back from HDFC limited during the quarter),
Kissan gold cards (+19% QoQ and 53% YoY) and Loan against shares (+13% QoQ
and 21% YoY).
n Growth in unsecured segments remained robust as personal loans grew +4%
QoQ (+21% YoY) and credit cards (+5% QoQ and 32% YoY).
n While on a reported basis, CV and CE (-3% QoQ, -11% YoY – an 13 quarter low
of INR128b) and business banking (-12% QoQ,-25% YoY) are key drag to retail
loan growth, management mentioned that on segmental basis (including
wholesale –customer having >INR50m exposure) business banking momentum
(+17% YoY) is healthy whereas, CV has bottomed out (flat QoQ, +8% YoY).
n Domestic corporate and international loans grew 6% QoQ and 26% YoY. This
segment formed ~53% of loan book. Corporate banking loan growth is largely
driven by working capital and trade finance related products; lower focus on
term loans. International book formed ~8% of the overall loan book.
Lowest Net stress loans in
the industry at 30bp
Strong growth in Home
loans led by higher buyback
from HDFC Limited
in 4QFY15

3. 23 April 2015 3
HDFC Bank
NIM stable QoQ; CASA ratio up 310bp
n NIM remained stable QoQ at 4.4% as the impact of decline in CD ratio (-270bp
QoQ) was compensated by improvement in CASA ratio (+310bp QoQ to 44%).
n CASA deposits accounted for ~80% of the incremental growth in deposits during
the quarter. CASA deposits grew 21% YoY and 17% QoQ.
n NII growth (21.4% YoY and +5.5% QoQ) continues to be marginally higher than
loan growth
n Bank added 611 branches in FY15; ~60% of these branch additions happened in
4QFY15.
Fee income growth tracking loan growth
n HDFCB reported continued traction in fee income (+21% YoY vs 15%/13% YoY in
3Q/2QFY15). Management indicated that third party distribution fees had some
lumpiness in 4Q, however all other line items witnessed sustained
improvement.
n Fee income growth was driven by (a) Pickup in third party business especially
Mutual Fund distribution (b) continued momentum in forex income (+30% QoQ
and YoY each) and (c) healthy growth in Auto and Personal loans (high
processing fees).
Higher branch expansion lifts opex growth to 8 quarter high
n Overall opex especially employee expense growth picked up during the quarter
led by focus on capacity building and cost of digitalization initiatives.
n Opex grew 21% YoY (+12% QoQ) led by 25% YoY growth in employee expenses.
Bank added ~1,750 employees during the quarter taking the overall number of
employees to ~78,000.
n Cost to Income ratio increased 260bp QoQ to 47.2% in 4QFY15. As the branches
mature, management expects cost to Income ratio to stabilize over the medium
term.
Other highlights
n During the quarter bank added 355 (59 in 3QFY15, and 611 in FY15) branches
and 133 ATMs (118 in 3QFY15 and 510 in FY15). Additionally, management
plans to open ~300 branches per annum going forward.
n CAR stood at 16.8% with Tier 1 at 13.7%.
Conference Call highlights
Balance Sheet related
n Retail disbursement growth especially in Auto (incl. CV), PL, HL and Business
banking remained strong at average growth of 20% YoY partially due to lower
base of 4QFY14. M&HCV growth robust at 40% YoY; LCV growth muted; gaining
market share in Auto loans.
n Unsecured loans, Auto and home loans to drive near term retail growth. Strong
underlying momentum seen from 2HFY16
n Business banking from a segment perspective grew 21% YoY. Decline seen in the
retail business banking (-3% QoQ and -20% YoY) is partially due to some of
customers moving to wholesale segment
NII growth continues to be
marginally better than
loan growth
Strong exchange profits
drove fee income growth
in 4QFY15
Despite strong expansion,
opex growth has lagged
revenue growth in the last
10 quarters

4. 23 April 2015 4
HDFC Bank
n Higher deposit growth due to one-off CA balances in 4Q; SA balance steadily
improving due to better cross sell and digital initiatives. HDFC Bank does not
offer SA interest rate of more than 4% in any of its products
n Quick Turn-around-time (TAT) and better service levels along with competitive
pricing with increased customer acquisition through better distribution, brand
and product to ensure market share gains going forward
n Increase in Investment book due to growth in Commercial Paper from large
corporate customers
P&L related
n Provisions break up (INR5.8b in 4QFY15) – General provisions (INR1.2b), NPA
provisions (INR4.3b) and others (INR0.3b).
n 2/3rd
of loan book is not linked to base rate, while 2/3rd
of term deposits are
short term in nature (upto 12 months). Hence, change in base rate not going to
meaningfully impact NIMs.
n No plans to change the 4% rate on SB account. Initiatives on digital and multiple
loan products would strengthen market position in low cost deposits.
n Higher share of lumpy fees in Third Party Distribution (especially Mutual Funds)
in 4Q; however, other fee line items showing a sustainable growth rate.
n Base rate calculation is already based on marginal cost of funds
Asset Quality
n 4QFY15 NPA movement: Additions (INR16.3b), Reductions (INR16.6b);
Annualized slippage ratio of 2.2%
n Full Year NPA movement: Additions (INR47.9b), Reductions (INR43.4b).
Recoveries (INR14b) and Updradations (INR10.8b).
n Calculated PCR stands at 73%. However, it stood at 164% adjusted for special,
general and floating provisions. Outstanding floating provisions at INR15.2b
n Outstanding SRs stood at INR2.6b
Data points
n Employee strength- 78,000
n Total customers including Jan Dhan – 32m
n RWA - INR4,230b

5. 23 April 2015 5
HDFC Bank
Valuation and view
n Structural drivers in place with (1) CASA ratio of ~44%, (2) growth outlook of at-
least 1.3x the industry growth, (3) improving operating efficiency, (4) expected
traction in income due to strong expansion in branch network, and (5) best in
the class asset quality.
n Retail loan growth is bottoming out and with the pickup in economic growth we
expect its contribution to overall loans to go up. In the near term high ROE retail
products like Unsecured retail loans, LAS etc will drive growth in our view.
HDFCB has built capacity in downcycle to capture opportunities in the wholesale
business and we expect it to play out as the risk aversion will reduce.
n Initial signs of core revenue growth pick up: Over the last 2-3 quarters, bank’s
core revenue growth has accelerated to 21% YoY (16% in FY14 and 22% in FY13).
With the improvement in economic growth and loan growth core revenues are
expected to remain 21%+ from hereon.
n Despite pricing pressure NIMs are expected to remain at current levels as a)
CASA growth will pick up b) benefit of falling rate cycle to occur due to high
share of fixed rate retail loans (~70% of book) c) high yielding retail loans
contribution to rise and d) capital raise to provide free float benefit (benefit of
~15bp to NIMs)
n Biggest risk to earnings for private financials is the implementation of dynamic
provisioning by RBI wherein, HDFCB is best placed due to floating provisions
created during the last three years. HDFCB carries floating provisions of
INR15.2b created to smoothen earnings growth led by better-than-factored
credit cost on retail loans.
n Earnings CAGR of 25%, best amongst large private banks, with core income
growth pick up led by healthy loan growth, stable NIMs and gradual
improvement in fee income. Further, opex growth is expected to be lower at
19% CAGR (strong operating leverage) over FY15/18 resulting into core PPP
growth of 26%+.
n Attractive valuations for strong liability franchise: Over the last 12 years,
HDFCB’s market share has increased significantly in (1) retail loans, (2) low cost
deposits and (3) higher share in profitability; indicating the strength of its
franchisee. Strong fundamentals and near nil stress loans would enable the bank
to gain further market share. RoEs are expected to be best amongst private
banks at ~20%. Maintain Buy.
Exhibit 2: One year forward P/BV
Source: Company, MOSL
Exhibit 3: One year forward P/E
Source: Company, MOSL
Buy with a target price of
INR1,350 (4x FY17E BV)

6. 23 April 2015 6
HDFC Bank
Exhibit 4: We largely maintain our estimates
INR b Old Estimates New Estimates % Change
FY16 FY17 FY16 FY17 FY18 FY16 FY17
Net Interest Income 275.0 339.1 282.8 350.0 437.6 2.8 3.2
Other Income 103.6 121.6 101.4 117.0 135.3 -2.1 -3.8
Total Income 378.6 460.7 384.2 466.9 572.9 1.5 1.4
Operating Expenses 162.6 197.3 165.1 197.5 236.3 1.5 0.1
Operating Profits 216.0 263.4 219.2 269.4 336.5 1.5 2.3
Provisions 24.4 31.4 26.1 28.0 35.5
PBT 191.6 232.0 193.1 241.4 301.0 0.8 4.1
Tax 64.2 76.5 64.7 80.9 100.8 0.8 5.7
PAT 127.4 155.4 128.4 160.5 200.2 0.8 3.3
Loans 4,509 5,636 4,532 5,665 7,081 0.5 0.5
Deposits 5,288 6,610 5,500 6,820 8,456 4.0 3.2
Margins (%) 4.8 4.8 4.7 4.7 4.8
Credit Cost (%) 0.6 0.6 0.6 0.5 0.5
RoA (%) 2.0 2.0 2.0 2.0 2.0
RoE (%) 19.3 20.2 19.2 20.6 21.8
Exhibit 5: DuPont Analysis: Strong improvement in risk adjusted NIMs and operating leverage; RoAs at a decadal high (%)
Y/E March FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Interest Income 9.4 10.5 8.1 8.2 9.1 9.5 9.2 9.0 9.1 9.1 9.2
Interest Expended 4.4 5.6 3.8 3.8 4.9 5.2 5.1 4.8 4.8 4.7 4.7
Net Interest Income 5.0 4.8 4.3 4.4 4.2 4.3 4.1 4.1 4.3 4.4 4.5
Core Fee Income 1.6 1.5 1.5 1.4 1.4 1.3 1.3 1.2 1.2 1.1 1.1
Fee to core Income 23.8 23.1 25.9 24.0 24.6 23.9 23.8 22.7 21.2 20.4 19.5
Core Income 6.6 6.3 5.8 5.8 5.6 5.6 5.4 5.4 5.5 5.5 5.6
Operating Expenses 3.8 3.8 3.2 3.1 3.0 3.0 2.7 2.6 2.5 2.5 2.4
Cost to Core Income 58.2 59.6 55.3 53.8 54.3 54.1 49.6 48.3 46.0 44.9 43.5
Employee cost 1.2 1.4 1.1 1.1 1.1 1.1 0.9 0.9 0.9 0.8 0.8
Others 2.7 2.3 2.1 2.0 1.9 2.0 1.8 1.7 1.7 1.6 1.6
Core operating Profits 2.8 2.5 2.6 2.7 2.5 2.6 2.7 2.8 3.0 3.0 3.1
Trading and others 0.7 0.9 0.8 0.6 0.5 0.5 0.5 0.4 0.4 0.3 0.3
Operating Profits 3.4 3.4 3.3 3.3 3.1 3.1 3.2 3.2 3.4 3.4 3.4
Provisions 1.4 1.3 1.2 0.9 0.6 0.5 0.4 0.4 0.4 0.4 0.4
NPA 1.1 1.2 1.1 0.5 0.4 0.3 0.4 0.3 0.4 0.3 0.3
Others 0.2 0.1 0.1 0.5 0.3 0.1 0.0 0.0 0.0 0.0 0.0
PBT 2.0 2.1 2.1 2.3 2.4 2.6 2.9 2.8 3.0 3.0 3.1
Tax 0.6 0.7 0.7 0.8 0.8 0.8 1.0 0.9 1.0 1.0 1.0
Tax Rate 30.3 32.0 31.3 32.5 31.2 31.0 33.6 33.4 33.5 33.5 33.5
RoA 1.4 1.4 1.5 1.6 1.7 1.8 1.9 1.9 2.0 2.0 2.0
Leverage (x) 12.5 11.9 11.1 10.7 11.1 11.2 11.2 10.3 9.7 10.2 10.6
RoE 17.7 16.9 16.1 16.7 18.7 20.3 21.3 19.4 19.2 20.6 21.8
Source: Company, MOSL

7. 23 April 2015 7
HDFC Bank
Exhibit 6: DuPont Analysis: Continued branch expansion led to higher opex in 4QFY15
1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15
NII 4.19 4.21 4.19 4.38 4.33 4.23 4.12 4.13 4.21 4.40 4.36 4.27
Fees (ex-forex) 1.32 1.32 1.49 1.41 1.26 1.28 1.40 1.27 1.14 1.23 1.38 1.30
Fees to core Inc 31.50 31.43 35.50 32.18 29.07 30.25 33.98 30.71 27.19 27.88 31.69 30.51
Core Income 5.51 5.54 5.67 5.79 5.59 5.50 5.52 5.40 5.35 5.63 5.75 5.58
Opex 3.01 2.91 2.93 3.20 2.98 2.77 2.58 2.65 2.59 2.79 2.65 2.74
Cost Core Inc (%) 54.69 52.63 51.68 55.24 53.27 50.32 46.62 49.04 48.32 49.63 46.04 49.12
Employee Exps. 1.14 1.04 1.06 1.03 1.09 0.98 0.87 0.88 0.92 0.93 0.87 0.94
Other Expenses 1.87 1.87 1.88 2.17 1.89 1.79 1.71 1.76 1.67 1.86 1.78 1.80
Core Oper. Profit 2.49 2.62 2.74 2.59 2.61 2.73 2.95 2.75 2.77 2.84 3.10 2.84
Trading and others 0.57 0.27 0.54 0.43 0.63 0.46 0.51 0.40 0.36 0.41 0.56 0.52
Operating Profit 3.07 2.89 3.28 3.02 3.24 3.20 3.46 3.15 3.13 3.24 3.66 3.36
Provisions 0.67 0.42 0.43 0.31 0.52 0.36 0.35 0.24 0.39 0.36 0.43 0.41
PBT 2.40 2.47 2.86 2.72 2.72 2.83 3.11 2.91 2.74 2.88 3.23 2.95
Tax 0.78 0.78 0.90 0.79 0.92 0.96 1.04 0.97 0.92 0.98 1.09 0.95
Tax Rate 32.30 31.53 31.56 29.01 33.65 33.94 33.53 33.40 33.56 33.93 33.75 32.29
ROA 1.62 1.69 1.95 1.93 1.81 1.87 2.07 1.94 1.82 1.90 2.14 2.00
Leverage (x) 11.34 11.35 11.07 10.94 10.94 10.74 10.79 11.11 10.98 10.57 10.41 9.90
ROE 18.43 19.21 21.62 21.10 19.77 20.10 22.32 21.55 19.95 20.10 22.27 19.75
Source: Company, MOSL

8. 23 April 2015 8
HDFC Bank
Story in charts
Exhibit 7: Robust loan growth led by wholesale book
Source: MOSL, Company
Exhibit 8: Deposits growth driven by momentum in CASA
Source: MOSL, Company
Exhibit 9: CASA ratio bounces back after a decline 3QFY15
Source: MOSL, Company
Exhibit 10: Margins remained stable QoQ
Source: MOSL, Company
Exhibit 11: Retail loan growth picking up gradually
Loan Break-up
(INR b)
4Q
FY15
4Q
FY14
YoY Gr
(%)
3Q
FY15
QoQ Gr
(%)
Auto 405 331 23 400 1
PL 258 204 27 248 4
LAS 14 11 21 12 13
2Wheerlers 42 33 25 40 5
CV and CE 128 144 -11 132 -3
CC 162 123 32 154 5
Bus. Banking 188 250 -25 213 -12
Home loans 241 193 25 200 21
Gold loans 41 40 0 39 4
Kissan gold cards 162 106 53 136 19
Others 89 61 45 74 19
Retail loans 1,728 1,497 15 1,648 5
Corp and International 1,927 1,533 26 1,823 6
Total loans 3,655 3,030 21 3,471 5
Source: MOSL, Company
Exhibit 12: ..however weakness in CV/CE portfolio persists
Source: MOSL, Company

9. 23 April 2015 9
HDFC Bank
Story in charts
Exhibit 13: Fee income growth at 9 quarter high
Source: MOSL, Company
Exhibit 14: CD Ratio declined during the quarter
Source: MOSL, Company
Exhibit 15: Highest ever branch additions of 611 in FY15
Source: MOSL, Company
Exhibit 16: GNPA improves led by asset sale to ARC
Source: MOSL, Company
83 82
84
79
83
85 85
81
85 86 85
82 84 84 84
81
1QFY12
1HFY12
9MFY12
FY12
1QFY13
1HFY13
9MFY13
FY13
1QFY14
1HFY14
9MFY14
FY14
1QFY15
1HFY15
9MFY15
FY15
CDRatio

10. 23 April 2015 10
HDFC Bank
Exhibit 17: Quarterly Snapshot
FY14 FY15 Variation (%) Cumulative Numbers
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q QoQ YoY FY14 FY15 YoY Gr (%)
Profit and Loss (INR m)
Net Interest Income 44,187 44,765 46,348 49,527 51,716 55,110 56,999 60,132 5 21 184,827 223,957 21
Other Income 19,256 18,444 21,483 20,014 18,506 20,471 25,349 25,638 1 28 79,196 89,963 14
Trading profits 1,995 -1,733 509 333 250 951 2,655 1,961 -26 489 1,104 5,817 427
Exchange Profits 3,143 5,014 3,332 2,521 2,242 2,217 2,534 3,287 30 30 14,010 10,280 -27
Others (Ex non core) 14,118 15,163 17,642 17,160 16,014 17,303 20,160 20,390 1 19 64,082 73,866 15
Total Income 63,443 63,209 67,830 69,541 70,222 75,581 82,348 85,769 4 23 264,023 313,920 19
Operating Expenses 30,382 29,342 28,951 31,747 31,784 34,979 34,563 38,550 12 21 120,422 139,876 16
Employee 11,091 10,357 9,730 10,612 11,259 11,669 11,325 13,256 17 25 41,790 47,510 14
Others 19,291 18,985 19,221 21,135 20,525 23,310 23,238 25,294 9 20 78,632 92,366 17
Operating Profits 33,061 33,867 38,880 37,794 38,438 40,602 47,786 47,220 -1 25 143,602 174,045 21
Provisions 5,271 3,859 3,888 2,861 4,828 4,559 5,604 5,767 3 102 15,880 20,758 31
PBT 27,790 30,007 34,991 34,933 33,610 36,043 42,181 41,453 -2 19 127,721 153,287 20
Taxes 9,351 10,184 11,734 11,667 11,280 12,228 14,236 13,384 -6 15 42,937 51,128 19
PAT 18,439 19,823 23,257 23,266 22,330 23,815 27,945 28,069 0 21 84,785 102,160 20
Asset Quality
GNPA 27,190 29,417 30,178 29,893 33,562 33,617 34,679 34,384 -1 15
NNPA 6,890 7,672 7,973 8,200 10,074 9,173 9,037 8,963 -1 9
GNPA (%) 1.0 1.1 1.0 1.0 1.1 1.0 1.0 0.9 -6 -5
NNPA (%) 0.3 0.3 0.2 0.3 0.3 0.3 0.3 0.2 -10 -10
PCR (Calculated, %) 74.7 73.9 73.6 72.6 70.0 72.7 73.9 73.9 -1 137
Ratios (%)
Fees to Total Income 22.3 24.0 26.0 24.7 22.8 22.9 24.5 23.8 24.3 23.5
Cost to Core Income 49.4 45.2 43.0 45.9 45.4 46.9 43.4 46.0 48.4 47.0
Tax Rate 33.6 33.9 33.5 33.4 33.6 33.9 33.8 32.3 33.6 33.4
CASA (Reported) 44.7 45.0 43.7 44.8 43.0 43.2 40.9 44.0
Loan/Deposit 85.3 85.8 85.0 82.5 83.9 83.8 83.8 81.1
RoA 1.8 1.9 2.1 1.9 1.8 1.9 2.1 2.0
RoE 19.8 20.1 22.3 21.5 20.0 20.1 22.3 19.8
Margins (%) - Calculated
Yield on loans 11.8 11.7 11.6 11.3 11.4 11.4 11.3 11.0 -29 -29 11.6 11.3 -32
Yield On Investments 8.2 8.9 8.7 7.7 7.6 8.3 8.2 8.1 -4 48 8.4 8.1 -30
Yield on funds 10.5 10.8 10.6 10.0 10.2 10.4 10.3 10.1 -25 2 10.5 10.2 -25
Cost of funds 6.2 6.5 6.4 5.8 5.9 6.0 6.1 5.9 -18 5 6.2 6.0 -26
Spreads 4.3 4.3 4.2 4.2 4.3 4.4 4.3 4.2 -8 -3 4.3 4.3 1
Margins 4.8 4.8 4.6 4.6 4.7 4.8 4.7 4.7 -9 4 4.7 4.7 2
Margins (%) - Reported 4.6 4.3 4.2 4.4 4.4 4.5 4.4 4.4 0 0 4.4 4.4 5
Source: MOSL, Company

11. 23 April 2015 11
HDFC Bank
Exhibit 18: Quarterly Snapshot continued
FY13 FY14 FY15 Variation (%)
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q QoQ YoY
Balance Sheet (INR b)
ESC 5 5 5 5 5 5 5 5 5 5 5 5 4 4
Reserves and Surplus 311 329 350 357 379 400 424 430 456 482 512 615 20 43
Net Worth 316 333 354 362 384 405 429 435 460 487 517 620 20 43
Deposits 2,575 2,741 2,841 2,962 3,033 3,130 3,492 3,673 3,721 3,907 4,141 4,508 9 23
Borrowings+Sub Debt 261 310 316 330 391 393 438 394 386 385 397 452 14 15
Other Liabiliites 448 389 326 349 355 383 322 413 346 320 294 325 11 -21
Total Liabilities 3,600 3,774 3,837 4,003 4,163 4,312 4,681 4,916 4,914 5,100 5,349 5,905 10 20
Cash 183 217 200 146 190 199 213 253 221 204 210 275 31 9
Money at call 57 50 47 127 64 81 139 142 80 113 121 88 -27 -38
Investments 902 917 960 1,116 1,048 1,019 1,106 1,210 1,237 1,296 1,340 1,665 24 38
Advances 2,133 2,316 2,415 2,397 2,586 2,686 2,967 3,030 3,121 3,273 3,471 3,655 5 21
Total earning assets 3,092 3,284 3,422 3,640 3,699 3,786 4,213 4,382 4,438 4,681 4,931 5,408 10 23
Fixed Assets 24 25 26 27 29 29 29 29 29 29 29 31 6 6
Other Assets 301 248 190 190 246 297 226 251 226 186 178 191 7 -24
Total Assets 3,600 3,774 3,837 4,003 4,163 4,312 4,681 4,916 4,914 5,100 5,349 5,905 10 20
Loan Break Up (%)
Retail 52.4 53.2 53.8 56.9 54.3 53.6 49.7 49.4 48.1 48.3 47.5 47.3 -20 -211
Auto Loans 12.9 12.5 12.4 12.9 12.5 12.1 11.3 10.9 11.1 11.5 11.5 11.1 -44 18
Personal Loans 6.9 6.8 7.0 7.3 7.2 7.2 6.8 6.7 6.9 7.1 7.1 7.1 -8 33
Loan against
securities 0.5 0.4 0.4 0.5 0.4 0.4 0.3 0.4 0.3 0.3 0.3 0.4 3 0
Two wheeler 1.2 1.2 1.2 1.3 1.2 1.2 1.1 1.1 1.1 1.1 1.1 1.1 0 4
CV & CE 6.8 7.1 6.8 6.7 6.5 6.3 5.6 4.8 4.3 4.2 3.8 3.5 -31 -126
Credit Cards 3.6 3.7 4.1 4.2 4.1 4.0 3.9 4.0 4.3 4.3 4.4 4.4 -1 37
Business Banking 9.2 9.3 9.6 10.2 9.2 9.6 9.0 8.3 7.1 6.7 6.1 5.2 -100 -311
Home loans 6.4 6.7 6.6 7.0 6.6 6.1 5.4 6.4 6.3 6.0 5.8 6.6 85 23
Gold loans 1.6 1.7 1.9 2.1 1.8 1.6 1.4 1.3 1.2 1.2 1.1 1.1 -1 -22
Kissan Gold Cards 2.1 2.9 2.9 3.5 3.5 3.9 3.9 4.4 50 94
Other Retail loans 3.4 3.7 1.7 2.2 2.3 2.2 1.9 2.0 2.0 2.0 2.1 2.4 28 40
Corp. & International 47.6 46.8 46.2 43.1 45.7 46.4 50.3 50.6 51.9 51.7 52.5 52.7 20 211
Franchise
Branches 2,564 2,620 2,776 3,062 3,119 3,251 3,336 3,403 3,488 3,600 3,659 4,014 10 18
ATM 9,709 10,316 10,490 10,743 11,088 11,177 11,473 11,256 11,428 11,515 11,633 11,766 1 5
Source: Company, MOSL

12. 23 April 2015 12
HDFC Bank
Exhibit 19: Financials: Valuation metrics
62.34 Rating CMP Mcap EPS (INR) P/E (x) BV (INR) P/BV (x) RoA (%) RoE (%)
(INR) (USDb) FY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17
ICICIBC* Buy 312 28.9 23.0 27.1 10.7 8.7 131 150 1.89 1.58 1.63 1.64 15.8 16.4
HDFCB Buy 1,014 40.7 52.0 63.1 19.5 16.1 287 336 3.53 3.02 2.00 1.99 19.5 20.3
AXSB Buy 538 20.3 37.5 44.0 14.4 12.2 219 255 2.46 2.11 1.79 1.75 18.4 18.5
KMB* Neutral 1,377 17.0 49.2 60.4 28.0 22.8 371 427 3.72 3.22 1.86 1.86 14.3 15.0
YES Buy 851 5.7 60.9 76.4 14.0 11.1 332 393 2.56 2.17 1.68 1.70 19.9 21.1
IIB Buy 857 7.3 43.2 54.6 19.8 15.7 227 274 3.77 3.13 1.90 1.97 20.7 21.8
DCBB Buy 119 0.5 7.3 9.5 16.5 12.6 63 72 1.90 1.65 1.12 1.17 12.3 14.1
FB Buy 129 1.8 13.0 15.6 9.9 8.3 100 112 1.29 1.15 1.20 1.19 13.7 14.7
JKBK Neutral 100 0.8 13.6 18.1 7.3 5.5 137 151 0.73 0.66 0.81 0.95 10.4 12.6
SIB Buy 25 0.5 3.7 4.7 6.8 5.4 29 33 0.86 0.77 0.78 0.86 13.3 15.2
Private Aggregate 123.6 17.2 14.3 2.78 2.41
SBIN (cons)* Buy 277 33.2 29.0 36.2 9.2 7.3 231 260 1.15 1.01 0.77 0.84 12.8 14.5
PNB Buy 160 4.6 26.8 36.2 6.0 4.4 231 263 0.69 0.61 0.77 0.91 12.2 14.6
BOI Neutral 218 2.3 50.3 64.3 4.3 3.4 455 511 0.48 0.43 0.46 0.49 11.6 13.3
BOB Neutral 179 1.2 24.1 30.8 7.5 5.8 184 208 0.97 0.86 0.70 0.78 13.7 15.7
UNBK Buy 153 1.6 36.6 47.1 4.2 3.2 320 359 0.48 0.43 0.57 0.64 12.0 13.9
INBK Buy 158 1.2 28.7 33.5 5.5 4.7 287 313 0.55 0.50 0.63 0.63 10.4 11.2
CRPBK Neutral 57 0.2 16.5 21.9 3.5 2.6 141 158 0.41 0.36 0.54 0.64 12.3 14.7
ANDB Buy 77 0.7 17.9 22.5 4.3 3.4 169 185 0.46 0.42 0.55 0.60 11.0 12.7
IDBI Neutral 79 2.0 14.4 19.7 5.4 4.0 157 173 0.50 0.45 0.58 0.69 9.5 11.9
DBNK Neutral 50 0.4 9.7 13.6 5.2 3.7 130 141 0.39 0.36 0.36 0.44 7.7 10.0
Public Aggregate 47.4 7.7 6.0 0.83 0.75
HDFC* Buy 1,276 31.9 38 46 21.6 16.4 165 192 5.03 3.93 2.53 2.53 23.8 24.9
LICHF Buy 443 3.6 33 39 13.5 11.3 198 229 2.24 1.93 1.43 1.42 17.8 18.3
IHFL Buy 561 3.3 64 79 8.7 7.1 215 246 2.61 2.28 4.23 4.29 32.4 34.3
IDFC Buy 169 4.3 13 14 13.4 11.8 109 120 1.29 1.16 2.20 2.19 11.5 12.0
RECL Buy 323 5.1 66 75 4.9 4.3 300 358 1.08 0.90 3.50 3.36 24.2 22.8
POWF Buy 276 5.8 55 63 5.0 4.4 288 334 0.96 0.83 3.18 3.11 20.6 20.1
SHTF Buy 1,031 3.8 78 92 13.2 11.3 494 573 2.09 1.80 2.27 2.44 16.3 17.7
MMFS Neutral 281 2.5 18 21 16.0 13.1 113 128 2.49 2.19 2.61 2.76 16.5 17.7
BAF Buy 4,281 3.4 219 267 19.5 16.1 1,137 1,360 3.77 3.15 2.94 2.88 21.0 21.4
NBFC Aggregate 63.8 14.8 12.8 2.74 2.38
*Multiples adj. for value of key ventures/Investments; For ICICI Bank and HDFC Ltd BV is adjusted for investments in subsidiaries

13. 23 April 2015 13
HDFC Bank
Financials and valuations
Income Statement (INR Million)
Y/E March 2011 2012 2013 2014 2015 2016E 2017E 2018E
Interest Income 203,808 278,742 350,649 411,355 484,699 592,737 724,585 898,368
Interest Expense 93,851 149,896 192,538 226,529 260,742 309,903 374,621 460,780
Net Interest Income 109,957 128,846 158,111 184,826 223,957 282,834 349,964 437,588
Change (%) 26.7 17.2 22.7 16.9 21.2 26.3 23.7 25.0
Non Interest Income 49,452 57,836 68,526 79,196 89,963 101,373 116,979 135,297
Net Income 159,409 186,682 226,637 264,023 313,920 384,207 466,943 572,885
Change (%) 20.3 17.1 21.4 16.5 18.9 22.4 21.5 22.7
Operating Expenses 77,800 92,776 112,361 120,422 139,876 165,053 197,503 236,337
Pre Provision Profits 81,609 93,906 114,276 143,601 174,045 219,154 269,440 336,548
Change (%) 20.4 15.1 21.7 25.7 21.2 25.9 22.9 24.9
Provisions (excl tax) 23,422 18,774 16,770 15,880 20,758 26,070 28,025 35,532
PBT 58,187 75,132 97,506 127,721 153,287 193,084 241,415 301,017
Tax 18,923 23,461 30,249 42,937 51,128 64,683 80,874 100,841
Tax Rate (%) 32.5 31.2 31.0 33.6 33.4 33.5 33.5 33.5
PAT 39,264 51,671 67,257 84,784 102,159 128,401 160,541 200,176
Change (%) 33.2 31.6 30.2 26.1 20.5 25.7 25.0 24.7
Equity Dividend (Incl tax) 8,948 11,749 15,360 19,275 23,803 29,917 37,406 46,641
Core PPP* 68,179 79,428 97,607 122,227 149,922 193,797 242,107 306,979
Change (%) 30.7 16.5 22.9 25.2 22.7 29.3 24.9 26.8
*Core PPP is (NII+Fee income-Opex)
Balance Sheet (INR Million)
Y/E March 2011 2012 2013 2014 2015 2016E 2017E 2018E
Equity Share Capital 4,652 4,693 4,759 4,798 5,013 5,013 5,013 5,013
Reserves & Surplus 249,140 294,553 357,383 429,988 615,081 713,565 836,699 990,234
Net Worth 253,793 299,247 362,141 434,786 620,094 718,578 841,712 995,247
Deposits 2,085,864 2,467,064 2,962,470 3,673,375 4,507,957 5,499,707 6,819,637 8,456,349
Change (%) 24.6 18.3 20.1 24.0 22.7 22.0 24.0 24.0
of which CASA Dep 1,099,083 1,194,059 1,405,215 1,646,214 1,984,920 2,421,602 3,027,003 3,783,754
Change (%) 26.2 8.6 17.7 17.2 20.6 22.0 25.0 25.0
Borrowings 143,941 238,465 330,066 394,390 452,136 523,562 612,045 721,788
Other Liabilities & Prov. 289,929 374,319 348,642 413,444 324,844 394,400 492,879 615,977
Total Liabilities 2,773,526 3,379,095 4,003,319 4,915,995 5,905,031 7,136,247 8,766,273 10,789,362
Current Assets 296,688 209,377 272,802 395,836 363,315 424,713 510,648 627,526
Investments 709,294 974,829 1,116,136 1,209,511 1,664,600 1,914,290 2,297,147 2,756,577
Change (%) 21.0 37.4 14.5 8.4 37.6 15.0 20.0 20.0
Loans 1,599,827 1,954,200 2,397,206 3,030,003 3,654,950 4,532,138 5,665,173 7,081,466
Change (%) 27.1 22.2 22.7 26.4 20.6 24.0 25.0 25.0
Fixed Assets 21,706 23,472 27,031 29,399 31,217 35,967 41,251 46,535
Other Assets 146,011 217,216 190,144 251,246 190,949 229,139 252,053 277,258
Total Assets 2,773,526 3,379,095 4,003,319 4,915,995 5,905,031 7,136,247 8,766,273 10,789,362
Asset Quality (%)
GNPA (INR m) 16,943 19,994 23,346 29,893 34,393 43,264 55,042 69,817
NNPA (INR m) 2,964 3,523 4,690 8,200 12,957 12,266 13,552 11,459
GNPA Ratio 1.0 1.0 1.0 1.0 0.9 0.9 1.0 1.0
NNPA Ratio 0.2 0.2 0.2 0.3 0.4 0.3 0.2 0.2
PCR (Excl Tech. write off) 82.5 82.4 79.9 72.6 62.3 71.6 75.4 83.6
E: MOSL Estimates

14. 23 April 2015 14
HDFC Bank
Financials and valuations
Ratios
Y/E March 2011 2012 2013 2014 2015 2016E 2017E 2018E
Spreads Analysis (%)
Avg. Yield-Earning Assets 9.4 10.4 10.6 10.3 9.9 9.9 9.8 9.8
Avg. Yield on loans 10.9 11.9 12.3 11.7 11.1 11.1 11.0 11.0
Avg. Yield on Invt 7.2 7.7 7.5 7.8 7.4 7.4 7.4 7.4
Avg. Cost-Int. Bear. Liab. 4.7 6.1 6.4 6.2 5.8 5.6 5.6 5.5
Avg. Cost of Deposits 4.3 5.6 6.0 5.7 5.5 5.2 5.1 5.1
Interest Spread 4.7 4.4 4.2 4.1 4.1 4.2 4.2 4.3
Net Interest Margin 5.1 4.8 4.8 4.6 4.6 4.7 4.7 4.8
Profitability Ratios (%)
RoE 16.7 18.7 20.3 21.3 19.4 19.2 20.6 21.8
RoA 1.6 1.7 1.8 1.9 1.9 2.0 2.0 2.0
Int. Expense/Int.Income 46.0 53.8 54.9 55.1 53.8 52.3 51.7 51.3
Fee Income/Net Income 27.5 29.3 27.3 27.2 24.2 22.8 22.0 21.1
Non Int. Inc./Net Income 31.0 31.0 30.2 30.0 28.7 26.4 25.1 23.6
Efficiency Ratios (%)
Cost/Income* 48.6 49.2 49.9 45.8 47.0 45.0 44.1 42.8
Empl. Cost/Op. Exps. 36.5 36.6 35.3 34.7 34.0 34.0 33.8 33.6
Busi. per Empl. (INR m) 61.5 66.5 72.4 87.9 106.7 125.2 148.8 178.1
NP per Empl. (INR lac) 0.7 0.8 1.0 1.2 1.5 1.8 2.1 2.5
* ex treasury
Asset-Liability Profile (%)
Loans/Deposit 76.7 79.2 80.9 82.5 81.1 82.4 83.1 83.7
CASA Ratio 52.7 48.4 47.4 44.8 44.0 44.0 44.4 44.7
Investment/Deposit 34.0 39.5 37.7 32.9 36.9 34.8 33.7 32.6
CAR 16.2 16.5 16.8 16.1 17.6 16.4 15.1 14.0
Tier 1 12.2 11.6 11.1 11.8 14.0 13.3 12.6 11.9
Valuation
Book Value (INR) 109.1 127.4 152.1 181.3 247.4 286.7 335.8 397.1
Change (%) 16.0 16.8 19.4 19.2 36.5 15.9 17.1 18.2
Price-BV (x) 9.3 8.0 6.7 5.6 4.1 3.5 3.0 2.6
Adjusted BV (INR) 108.2 126.4 150.7 178.9 243.8 283.3 332.1 393.9
Price-ABV (x) 9.4 8.0 6.7 5.7 4.2 3.6 3.1 2.6
EPS (INR) 16.9 22.0 28.3 35.3 40.8 51.2 64.0 79.9
Change (%) 31.0 30.4 28.4 25.0 15.3 25.7 25.0 24.7
Price-Earnings (x) 60.1 46.1 35.9 28.7 24.9 19.8 15.8 12.7
Dividend Per Sh (INR) 3.3 4.3 5.5 6.9 8.2 10.2 12.8 16.0
Dividend Yield (%) 0.3 0.4 0.5 0.7 0.8 1.0 1.3 1.6
E: MOSL Estimates

15. 23 April 2015 15
HDFC Bank
Corporate profile: HDFC Bank
Exhibit 21: Shareholding pattern (%)
Mar-15 Dec-14 Mar-14
Promoter 21.7 22.5 22.6
DII 9.7 10.0 9.9
FII 51.4 50.6 51.1
Others 17.2 16.9 16.4
Note: FII Includes depository receipts
Exhibit 22: Top holders
Holder Name % Holding
Europacific Growth Fund 3.8
LIC of India 2.6
ICICI Prudential Life Insurance Company Ltd 1.6
ICICI Prudential Focused Bluechip Equity Fund 1.2
Government of Singapore 1.2
Exhibit 23: Top management
Name Designation
Aditya Puri Managing Director
Paresh Sukthankar Deputy Managing Director
Sashidhar Jagdishan CFO
Exhibit 24: Directors
Name Name
Shyamala Gopinath Renu Karnad
Aditya Puri Bobby Parikh*
Paresh Sukthankar Pandit Palande*
A N Roy* Partho S Datta*
Keki Mistry Kaizad Bharucha
*Independent
Exhibit 25: Auditors
Name Type
BSR & Co LLP Statutory
Exhibit 26: MOSL forecast v/s consensus
EPS
(INR)
MOSL
forecast
Consensus
forecast
Variation
(%)
FY16 51.2 51.8 -1.1
FY17 64.0 63.5 0.8
FY18 79.9 72.7 9.9
Company description
HDFC Bank amongst the ten private sector bank
which were awarded license post liberalization of
1990s. The bank was incorporated in August 1994
and is promoted by the biggest mortgage lender in
the country, HDFC Limited (21.6% stake). The bank
is now the second largest private sector bank in
India with asset size of ~INR6t and market share of
~5% in deposit and loans respectively. As on March
31, 2015, the bank had a network of 4,014
branches and 11,766 ATMs spread across 2,464
cities/towns in the country.
Exhibit 20: Sensex rebased

16. 23 April 2015 16
HDFC BankDisclosures
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