CLSA bullish on HDFC Bank, Kotak Mahindra Bank and Airtel post Q2 result

Mumbai: CLSA has retained bullish outlook on HDFC Bank, Kotak Mahindra Bank and Bharti Airtel following their second quarter numbers. Here's why:

HDFC Bank: CLSA has retained a buy rating and a target price of Rs 1,530. On Tuesday, the country's most valuable lender HDFC Bank reported a 20.4% rise in net profit at Rs 3,455 crore for the quarter ended September 30, led by strong net interest income and healthy loan growth. CLSA said the net profit was in line with estimates and the 19% growth in CASA deposits was a key positive but weak fee growth was disappointing.
"We see a 23% CAGR in earnings over FY16-19, led by a healthy rise in operating profit and stable asset quality. High ROE should support premium valuations," said CLSA.

Kotak Mahindra Bank: CLSA has maintained outperform rating with a target price of Rs 890. Kotak Mahindra Bank on Tuesday reported a 42.63% year on year rise in net profit to Rs 813 crore for the quarter ended September 30.
"We expect ROA to expand to 1.6% by FY18 and drive ROE expansion. Valuations are rich, though partly justified by high growth and strong asset quality," the brokerage said.

Bharti Airtel: CLSA has maintained buy rating on the telecom firm after the second quarter result and raised target price to Rs 410 from Rs 393 as valuations are at a 15% discount to three year average EV/EBITDA. The brokerage said the company's consolidated EBITDA growth of 15% in the quarter from the same period a year ago was higher than expectation. Following the beat, CLSA has upgraded its FY17-19 EBITDA forecasts by 2-3% and profit estimates by 8-16%.

"Bharti also enhanced its spectrum edge in the recent auctions, with wins across 1800/2100/2300MHz. Since the auctions, Bharti has extended its spectrum share lead to 4-8ppts over peers. Given its spectrum edge and strong execution, it remains well-placed to leverage India’s mobile data boom," said CLSA in a note.