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Shares of HDFC Bank Ltd. (HDB - Analyst Report) touched a new 52-week high of $47.49 during its trading session on Jun 3. The new 52-week high improved from the last one of $47.31 reached on May 22.

HDFC Bank closed the session on Jun 3 at $47.19, reflecting a solid year-to-date return of 20.6%. The trading volume for the session was 1.2 million shares. Earnings estimate revisions for fiscal 2015 and 2016, along with an expected earnings growth rate of 30.0% for the next five years indicate further upward potential for HDFC Bank.

Growth Drivers

Share price of HDFC Bank has risen by 15.8% since the release of fiscal fourth-quarter 2014 (ended Mar 31, 2014) results on Apr 22. The bank reported 23.1% year-over-year increase in the net profit driven by boost in net interest income and fee revenues.
HDFC Bank’s net revenues grew by 14.0% due to a 15.3% increase in net interest income and 11% hike in non-interest revenues. The top-line growth was partially offset by a 1.2% increase in operating expenses.
Total deposits increased 24.0% year over year while advances rose 26.4%. Asset quality improved as provisions and contingencies declined 4.8% year over year. Gross nonperforming assets remained unchanged at 1.0% of gross advances.   

Enhanced asset quality as well as the company’s focus on expanding its branch network to drive higher deposits and loans has made us optimistic about HDFC Banks’ performance in the coming quarters.

Estimate Revisions Show Potency

Over the last 60 days, the Zacks Consensus Estimate for HDFC Bank has inched up by 1.3% to $2.30 per American Depository Receipt (ADR) for fiscal 2015 and by 2.8% for fiscal 2016. These consensus estimates reflect a year-over-year growth of 32.2% for fiscal 2015 and 27.0% for fiscal 2016.

HDFC Bank presently has a market capitalization of $226.4 million and carries a Zacks Rank #2 (Buy). Some better-ranked stocks in the industry include Australia & New Zealand Banking Group Limited (ANZBY), Banco Bradesco S.A. (BBD - Snapshot Report) and BBVA Banco Franc (BFR - Snapshot Report). All these companies sport a Zacks Rank #1 (Strong Buy).

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