Kotak cuts HDFC Bank to "reduce" on valuations

Says HDFC Bank has limited scope for near-term appreciation

Kotak Institutional Equities downgrades HDFC Bank to "reduce" from "add", though it raises the target price to Rs 575 from Rs 565. HDFC shares flat at Rs 586.85.

Kotak says HDFC Bank trading at "expensive" multiples of 3.3 times fiscal 2014 book and 16 times EPS, sees "limited scope for near-term appreciation."

The brokerage says "maintaining the current pace of earnings growth may be difficult over the medium term as loan growth is about 20%."

The downgrade comes even after India's third-biggest lender beat forecasts on Friday with a 30.6% rise in April-June net profit.