HDFC Bank stock offers a lot of value from long-term perspective: Nitin Kumar, Quant Broking

HDFC Bank Ltd, country's third-biggest lender by assets, said its quarterly net profit rose 23 per cent, the slowest growth in a more than a decade and slightly lower than estimates, as a weaker economy put the brakes on lending. In an interview with ET Now, Nitin Kumar of Quant Broking talks about HDFC Bank's Q4 results and his outlook for the stock.

ET Now: What would your call be on HDFC Bank's performance?

Nitin Kumar: The PAT has definitely missed our estimates. The bank almost met the NII estimate. This has happened despite much lower provision, so this is due to the slow other income. However, overall it is a miss based on our estimate.

ET Now: What is your take the asset quality because that has come in flat. That should be a big relief in an economic environment like right now...

Nitin Kumar: Yes, asset quality side, the gross and net NPL ratio has been flat on a sequential basis. The bank did report some deterioration earlier wherein it saw increased delinquencies in the retail segment, but since then it went cautious in that segment. Focus reverted to the corporate and the segment which was growing healthily. So the delinquencies that have declined could be because of the cautious path that the bank took. That has been as per the estimates.

ET Now: What is the view on the stock price in light of the FII shareholding still being such a big overhang?

Nitin Kumar: Yes, there has been an technical overhang on the stock. That is the reason the the stock has not participated in the current rally. If you look at the private banks, the FII holding has increased across banks. But, HDFC Bank is one where it has not moved anywhere over last one year. It has been in plus minus 1% band. From a longer term basis the bank still offers a lot of value. It is still trading at very good levels from a one year kind of view.

ET Now: Is it a buy at the current levels?

Nitin Kumar: Definitely yes.

ET Now: What is your 12 month price target on HDFC Bank?

Nitin Kumar: We are still to roll out our price target based on FY16. Our FY15 price target was Rs 700