HDFC Bank increased fixed deposit (FD) rates across nine maturities by 25-150bp. The rate hike comes three weeks after the third-quarter monetary policy review of the Reserve Bank of India (RBI), when the central bank increased the cash Reserve ratio by 75bp.
In a rising rate scenario, where the credit growth is expected to improve in the coming quarters, the bank has decided to align its deposit rates with the market. At the CMP, the stock is trading at 15.2x FY2012E EPS of Rs112.1 and 2.8x FY2012E ABV of Rs607.6. We maintain a BUY on the stock, with a 15-month target price of Rs2,127.
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