"HDFC delivered another consistent healthy core performance in the challenging quarter. Business growth continued to be ~ 20% y-o-y while asset quality remains pristine. We expect HDFC to deliver 20.0% CAGR in core earnings on the back of strong loan growth, stable spreads and steady credit cost over FY12-FY14. Market leadership in housing finance sector, superior underwriting standards, stable spreads, well diversified borrowing profile and unlocking value of subsidiaries are key value drivers for the stock in medium term. At Rs 678, the stock is trading at 4.2x FY14 book value and 17.1x FY14 earnings, closer to fair valuation," the broking firm has stated.

"RoA and RoE continue to remain at superior levels ~ 2.7% and 24.4% respectively in FY14.We have fine tuned our FY13 & FY14 earnings estimates factoring lower trading gains. We believe wholesale funded entities would see cyclical gains in term of lower cost of funds, better growth prospects and re-rating in valuation multiple in falling interest rate environment. Hence, we maintain ACCUMULATE rating on the stock with target price of Rs 741," K R Choksey has stated in its report.

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