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Analyst Blog

On Jun 30, 2014, we issued an updated research report on HDFC Bank Ltd. (HDB - Analyst Report). The company reported robust fourth-quarter fiscal 2014 results, driven by growth in top line.

In the fourth quarter, HDFC Bank’s net revenues grew 14% year over year due to rise in net interest income and fee income. Enhancement of market share in India remains the primary company strategy.

With its widespread branch network and strong brand equity, HDFC Bank has been able to garner a large share of the Indian retail market. As of Mar 31, 2014, the company had a retail network of 3,403 branches and 11,256 ATMs in 2,171 cities.

Given the impressive fourth-quarter results, the Zacks Consensus Estimate depicted bullish response over the last 60 days. The Zacks Consensus Estimate for fiscal 2015 grew 2.7% to $2.30 per ADR, while for fiscal 2016 it increased 3.5% to $2.92 per ADR.

Nevertheless, raising operating expenses remain a major headwind for HDFC Bank. With the company continuing to strengthen its network, we anticipate non-interest expenses to rise going forward.

HDFC Bank currently has a Zacks Rank #2 (Buy).

Stocks That Warrant a Look

Some better-ranked foreign banks include BBVA Banco Franc (BFR - Snapshot Report), Banco Bradesco S.A. (BBD - Snapshot Report) and The Royal Bank of Scotland Group plc (RBS - Snapshot Report). All these stocks sport a Zacks Rank #1 (Strong Buy).

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