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C overage 08 Se ptembe r

g C ove ra ge 0 8 S e pte m b e r

t i n g C o ve ra ge 0 8 S e pte m b e r

tiating C overage 08 S e ptem ber

rage 08 Septe m be r

Post this Correction Valuation looks attractive:

verage 08 S e ptem ber

Amongst the Private Banks we believe, ICICI Bank and HDFC Bank have attractive valuation. ICICI
Bank is trading at 11.9x and 10.1x its FY16 and FY17E EPS. Whereas, HDFC Bank is trading at 20.0x
and 16.2x its FY16 and FY17E EPS.

ber

ember

ptember

September

08 September

Having gone through a recent correction since last month, where the Bank Nifty was down 17% as
against a 12% decline in Nifty. Currently, most of the Banks are trading at the historical lower P/E
multiple, post correction the valuations of stocks in the Private Banking space looks attractive, with
limited downside from the current levels.

ge08 September

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Banking Sector Update

Within in Public Sector Banks, SBI is trading at 8.5x and 7.1x its FY16 and FY17E EPS. Whereas, Bank
of Baroda is trading at 8.7x and 6.9x its FY16 and FY17E EPS.

Valuation Table:

Particulars
Private Banks:
HDFC Bank Ltd.
ICICI Bank Ltd.
Axis Bank Ltd.
Yes Bank Ltd.
IndusInd Bank Ltd.
The Federal Bank Ltd.
DCB Bank Ltd.
Public Sector Banks:
State Bank Of India
Bank Of Baroda

CMP

PE FY16E

PE FY17E

P/BV FY16E

P/BV FY17E

ROE FY16E

ROE FY17E

1,004
261
474
697
840
58
126

20.0
11.9
12.9
11.7
20.5
9.6
17.2

16.2
10.1
10.6
9.4
16.3
7.7
13.5

3.5
1.7
2.2
2.1
3.0
1.2
2.0

3.0
1.5
1.9
1.8
2.6
1.0
1.8

18.68%
14.90%
18.02%
19.72%
17.42%
12.65%
12.32%

19.83%
15.70%
18.88%
20.86%
16.84%
14.25%
13.92%

228
178

8.5
8.7

7.1
6.9

1.0
0.9

0.9
0.8

11.50%
11.04%

12.49%
12.52%

Source: Bloomberg

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C overage 08 Se ptembe r

g C ove ra ge 0 8 S e pte m b e r

t i n g C o ve ra ge 0 8 S e pte m b e r

tiating C overage 08 S e ptem ber


600
400
200
0

01-Apr-09

01-Apr-10

01-Apr-11

Price

12x

01-Apr-12
15x

01-Apr-13

18x

21x

01-Apr-14
24x

01-Apr-15

600
400
200
0

01-Apr-09

01-Apr-10

01-Apr-11
Price

2x

01-Apr-12
2.5x

01-Apr-13
3x

3.5x

01-Apr-14

800

ber

800

1000

ember

1000

1200

ptember

1200

1400

P/BV - Forward

September

1400

1600

08 September

1600

P/E - Forward

ge08 September

HDFC Bank

rage 08 Septe m be r

Historical Valuation of different Banks:

verage 08 S e ptem ber

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Banking Sector Update

01-Apr-15

4x

Comment: Historically the share of HDFC Bank trades at 15x its EPS at the lower level and currently it is
trading at 16.2x its FY17E its EPS, which looks attractive.

ICICI Bank
P/BV - Forward

P/E - Forward
450

600

400
500

350
300

400

250
300

200
200

150
100

100

50
0
01-Apr-09

01-Apr-10

01-Apr-11
Price

4x

01-Apr-12
8x

01-Apr-13
12x

16x

01-Apr-14
20x

01-Apr-15

0
01-Apr-09

01-Apr-10

01-Apr-11
Price

0.5x

01-Apr-12
1x

01-Apr-13
1.5x

2x

01-Apr-14

01-Apr-15

2.5x

Comment: ICICI Bank bottom outs at sub levels of 9x its EPS at the lower level and currently it is trading at
an attractive level of 10.1x its FY17E its EPS.
Source: Company data, Nirmal Bang Research

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01-Apr-10

01-Apr-11
Price

Yes Bank

1200

1000

800

600

01-Apr-12

4x

8x

01-Apr-13

12x

16x

P/E - Forward

01-Apr-14

20x

01-Apr-15

01-Apr-09

01-Apr-10

01-Apr-11

Price

0.5x

01-Apr-12
1x

01-Apr-13

1.5x

2x

01-Apr-14

01-Apr-09

100

ber

100

200

ember

200

300

ptember

300

400

September

400

500

08 September

500

600

ge08 September

600

700

rage 08 Septe m be r

700

P/BV - Forward

P/E - Forward

verage 08 S e ptem ber

800

C overage 08 Se ptembe r

Axis Bank

g C ove ra ge 0 8 S e pte m b e r

t i n g C o ve ra ge 0 8 S e pte m b e r

tiating C overage 08 S e ptem ber

B a n k s Va l u a t i o n - I n
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Banking Sector Update

01-Apr-15

2.5x

P/BV - Forward

1200

1000

800

600

400

400

200

200

Source:
data,01-Apr-11
Nirmal Bang
Research
01-Apr-09Company
01-Apr-10
01-Apr-12
01-Apr-13
Price

3x

6x

9x

12x

0
01-Apr-14

01-Apr-15

01-Apr-09

01-Apr-10

15x

01-Apr-11
Price

0.5x

01-Apr-12
1x

01-Apr-13
1.5x

2x

01-Apr-14

01-Apr-15

2.5x

IndusInd Bank
P/E - Forward

P/E - Forward

1200

1200

1000

1000

800

800

600

600

400

400

200

200

0
01-Apr-09

01-Apr-10

01-Apr-11

01-Apr-12

01-Apr-13

01-Apr-14

01-Apr-15

0
01-Apr-09

Price

4x

8x

12x

16x

01-Apr-10

01-Apr-11

01-Apr-12

01-Apr-13

01-Apr-14

01-Apr-15

20x

Price

4x

8x

12x

16x

20x

Source: Company data, Nirmal Bang Research

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10

01-Apr-09

01-Apr-10

01-Apr-11
Price

DCB Bank

200

150

100

50

01-Apr-09

01-Apr-10

4x

01-Apr-12
6x

01-Apr-13

8x

10x

P/E - Forward

01-Apr-14

12x

01-Apr-15

30

20
10

01-Apr-09

200
180

01-Apr-10

01-Apr-11
Price

01-Apr-12

0.8x

1x

01-Apr-13

1.2x

1.4x

01-Apr-14
1.6x

01-Apr-15

20

ber

30

40

ember

40

50

ptember

50

60

September

60

70

08 September

70

80

ge08 September

80

90

rage 08 Septe m be r

90

P/BV - Forward
100

P/E - Forward

verage 08 S e ptem ber

100

g C ove ra ge 0 8 S e pte m b e r

Federal Bank

C overage 08 Se ptembe r

t i n g C o ve ra ge 0 8 S e pte m b e r

tiating C overage 08 S e ptem ber

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Banking Sector Update

P/BV - Forward

160
140
120
100
80
60

01-Apr-11

01-Apr-12

01-Apr-13

01-Apr-14

01-Apr-15

40
20

-50

0
-100

01-Apr-09
Price

4x

8x

12x

16x

01-Apr-10

20x

01-Apr-11
Price

01-Apr-12

0.5x

1x

01-Apr-13
1.5x

2x

01-Apr-14

01-Apr-15

2.5x

State Bank of India


P/E - Forward
600

P/E - Forward
600

500
500

400
400

300
300

200

200

100

100

0
01-Apr-09

01-Apr-10

01-Apr-11
Price

01-Apr-12
3x

6x

01-Apr-13
9x

12x

01-Apr-14
15x

01-Apr-15

01-Apr-09

01-Apr-10

01-Apr-11
Price

01-Apr-12
3x

6x

01-Apr-13
9x

12x

01-Apr-14

01-Apr-15

15x

Source: Company data, Nirmal Bang Research


Source: Company data, Nirmal Bang Research

4|Page

0
Source:
Company data, Nirmal Bang Research
01-Apr-09

01-Apr-10

01-Apr-11
Price

4x

01-Apr-12
6x

8x

01-Apr-13
10x

Source: Company data, Nirmal Bang Research

01-Apr-14

12x

01-Apr-15

100
50
0

01-Apr-09

01-Apr-10

01-Apr-11

Price

0.5x

01-Apr-12
0.8x

01-Apr-13

1.1x

1.4x

01-Apr-14

150

ber

200

ember

50

250

ptember

100

300

September

150

350

08 September

200

400

ge08 September

250

P/BV - Forward

rage 08 Septe m be r

300

P/E - Forward

verage 08 S e ptem ber

350

C overage 08 Se ptembe r

Bank of Baroda

g C ove ra ge 0 8 S e pte m b e r

t i n g C o ve ra ge 0 8 S e pte m b e r

tiating C overage 08 S e ptem ber

B a n k s Va l u a t i o n - I n
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Banking Sector Update

01-Apr-15

1.7x

Anupam Bafna
Research Associate
+91 22 3926 8186
anupam.bafna@nirmalbang.com

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ber

ember

ptember

September

08 September

ge08 September

rage 08 Septe m be r

verage 08 S e ptem ber

C overage 08 Se ptembe r

g C ove ra ge 0 8 S e pte m b e r

t i n g C o ve ra ge 0 8 S e pte m b e r

tiating C overage 08 S e ptem ber

B a n k s Va l u a t i o n - I n
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Disclaimer:

Banking Sector Update

Nirmal Bang Securities Private Limited (hereinafter referred to as NBSPL )is a registered Member of National Stock Exchange of India Limited,
Bombay Stock Exchange Limited and MCX stock Exchange Limited. NBSPL is in the process of making an application with SEBI for registering as
a Research Entity in terms of SEBI (Research Analyst) Regulations, 2014.
NBSPL or its associates including its relatives/analyst do not hold any financial interest/beneficial ownership of more than 1% in the company
covered by Analyst (in case any financial interest is held kindly disclose)
NBSPL or its associates/analyst has not received any compensation from the company covered by Analyst during the past twelve months. NBSPL
/analyst has not served as an officer, director or employee of company covered by Analyst and has not been engaged in market making activity of
the company covered by Analyst.
The views expressed are based solely on information available publicly and believed to be true. Investors are advised to independently evaluate
the market conditions/risks involved before making any investment decision.
This document, at best, represents Analyst opinion and is meant for general information only. NBSPL, its directors, officers or employees shall not
in any way be responsible for the contents stated herein. NBSPL expressly disclaims any and all liabilities that may arise from information, errors or
omissions in this connection. This document is not to be considered as an offer to sell or a solicitation to buy any securities.

Nirmal Bang Research (Division of Nirmal Bang Securities Pvt. Ltd.)


B-2, 301/302, Marathon Innova,
Opp. Peninsula Corporate Park,
Off Ganpatrao Kadam Marg,
Lower Parel (W), Mumbai-400013
Board No. : 91 22 3926 8000/8001
Fax. : 022 3926 8010

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