At the CMP, the stock is trading at 16.3x FY2010E EPS of Rs 54 and 2.8x FY2010E adjusted book value (ABV) of Rs 318. They have a positive outlook on the Bank and believe it deserves premium valuation on account of its attractive CASA Deposit franchise, relatively low-risk Lending franchise, multiple sources of sustainable (and relatively low-risk) Fee Income, strong growth outlook and A-list management.
Downside risks include tight Monetary Policy stance prevailing longer than anticipated as well as unfavourable developments on the Forex Derivatives front. They maintain a buy on the stock, with a 12-month Target Price of Rs 1,268.
