Back to top

Bear of the Day

HDFC Bank (HDB), like most Indian banks, are expected to encounter higher cost of funds as they have to raise deposit rates to meet increasing loan demand. This will keep margins of some banks including HDFC Bank under pressure. But as lending rates are expected to climb faster in the upcoming quarters, demand for loans would decline.

On a price-to-book basis, HDFC Bank is trading at 3.8x, a sizeable premium to the 1.1x for the industry average. The valuation on a price-to-book basis looks expensive, given a trailing 12- month ROE that is only 9% above the industry average.

Our six-month target price of $28.00 per ADS equates to about 23.1x our earnings estimate for fiscal 2012. This target price implies an expected negative total return of 10.1% over that period. This is consistent with our long-term Underperform recommendation on the ADSs.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
COVENANT TR… CVTI 12.50 +3.22%
FELCOR LODG… FCH 10.42 +2.96%
OLD DOMINIO… ODFL 63.35 +0.96%
FIRSTSERVIC… FSRV 56.08 +0.63%
VASCO DATA… VDSI 13.48 0.00