Zacks Investment Research downgraded shares of HDFC Bank Ltd. – ADR (HDB) from OUTPERFORM to NEUTRAL on April 02, 2014, with a target price of $43.00.
We are downgrading our recommendation on HDFC Bank to Neutral owing to persistently rising operating expenses. However, the company reported robust third-quarter (ended Dec 31) fiscal 2014 results driven by revenue growth, partially offset by higher expenses. Further, deposit and loan balances as well as credit quality showed improvement. Although we expect negative impact from new capital regulations and deterioration in asset quality, continued synergies from the company's exposure to the fast-growing Indian retail credit sector will likely offset these negatives. Additionally, consistent branch expansion will lead to further growth in deposits and loans.
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