Citigroup - HDFC Bank

Our valuation is based on our EVA-based methodology, which values HDFC
Bank at Rs955. Our EVA value is based on an 8% risk-free rate, higher-than industry margins (275bps vs 230bps average) and higher capital ratio (6.75%
vs 6% average).

Our target price is also benchmarked off a 4x one-year forward P/BV, which
corresponds to a fair value of Rs891. The basis for our target multiple - a
distinct premium to all other Indian commercial banks - is HDBK's structurally
higher margin, de-risked earnings and balance sheet mix, and gains in the
consumer-lending franchise. Our target multiple is at a significant premium to
the Indian banking average. We believe a re-rating from these levels would be
difficult.

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