Housing Development Finance Corporation Ltd. share price target

HDFC's core PBT grew 19% YoY to INR33.4b (estimate of INR34.2b) of). NII (ex-assignment income) at INR40.3b was 4% above our estimate. On the other hand, provisions at INR7.2b were much higher than our est. of INR3.8b. Better-than-expected MTM gains on investment led to a 12% beat on reported PAT (+9 QoQ /42% YoY). For FY21, core PBT / core operating profit grew a healthy 15%/17% YoY to INR126b/INR146b, despite an additional ESOP charge of INR3.4b. Strong disbursement growth (on a low base) of 60% YoY, stable QoQ...

Robust pick up in individual disbursement at 60%, margin expansion of ~10 bps and collection efficiency at 98% reflect healthy revival in individual business which comprises ~74% of gross loan book. We remain positive on earnings visibility given 1) business growth led by market leadership, 2) adequate capital of 22.2%, 3) funding advantage and 4) healthy provision buffer. Healthy performance in subsidiaries would aid consolidated earnings. Stake sale in HDFC Ergo (to reduce stake as per regulatory regime) could lead to one off inflows. We expect earnings to grow at 14.6% CAGR...

Solid growth in core metrics for the quarter Housing Development Finance Corporation Limited provides housing finance to individuals and corporates in India. HDFC also provides...

Robust individual disbursement at 26% YoY, margin expansion of 20-30 bps and collection efficiency at 97.6% (near pre Covid level) remain key characteristics of revival in individual business that comprises ~72% of book. Subdued collection and stress accretion in non-individual book is offset by provision buffer at ~2.6% of advances. Business growth led by adequate capital and healthy earnings visibility on the back of funding advantage and provision buffer keeps us positive on the fundamental strength. We expect earnings to grow at 14% CAGR in FY21-23E with...

HDFC's asset quality remain stable with gross stage 3 assets stood at 2.28% vs 2.19% QoQ; better than estimated. Also, restructured assets stood at 0.9% of AUM which majorly comprises of one large real estate builder group (0.5% of AUM). PAT declined by 65%YoY; however adjusted for dividend, fair value gain (merger of Gruh with Bandhan bank), net gains on assigned loans, provisioning and employee stock option, PBT grew by 27% YoY. Collection efficiency for individual loans for December month stood at 97.6% vs 96.3% for September month. Disbursements for individual loan segment grew by 26% YoY reflects housing demand remains robust. December 2020 witnessed the highest ever levels in terms...

HDFC's core PBT grew 21% YoY to INR33.5b (5% beat), driven by a similar beat on NII and higher assignment income recognized during the quarter (almost 2x of estimate). Provisions at INR5.9b were much higher than our est. of INR4b. Individual disbursements grew 26% YoY for 3Q, and individual AUM grew 4% QoQ /10% YoY. Led by overall buoyancy in the RE sector, the growth outlook for the Individual segment remains healthy. Adjusted for the Supreme Court (SC) dispensation, GNPL deteriorated by 8bp to 1.91%. In addition, 90bp of AUM has been restructured, of which...

Restructured book stood at 0.9% of AUM; collection efficiency at 97.6% Not just supported by other income gains, but also core profitability and controlled asset quality, Q3FY21 proved to be a healthy quarter for HDFC. The biggest positive came in the form of improved asset quality on the back of (a) GNPA at 1.9% (vs our estimates of 2.1%), (b) restructured book restricted to 0.9%, (c) collection efficiency for individual home loans climbing to ~98% and (d) consistent high order PCR at 49%. Robust collection efficiency into retail loan book at 98%+ led by stronger recoveries and sustenance of pricing...

With growing concerns around the asset quality and limited upside potential at current price levels, we downgrade our rating on the stock to HOLD, with a revised TP of Rs. 2,434, based on SOTP valuation. Mixed quarter with higher NII offset by lower non-interest income Q2FY21 recorded a robust growth of 20.7% YoY in net interest income at Rs.3,647cr (Rs. 3,021cr in Q2FY20) and NIM stood at 3.2% for H1FY21 (down by 10bps vs 3.3% in H1FY20). For H1FY21, cost to income ratio was noted at 8.5% (vs. 9.7% in H1FY20). Provisions stood at Rs. 12,304cr with 2.6% exposure at default. Lower other income...

1627.04 crore in Q2FY2020 from part stake sale in Gruh Finance leading to higher base and yoy decline in profit for Q2FY2021. However, the company has exhibited an improvement in the net interest margins. The cost to income ratio has improved 8.4% in Q2FY2021 from 9.4% in Q2FY2020. The loan growth of the company remained healthy and steady at 11% with the pick-up in disbursement. The operating profit of the company increased 9%, but profit on sale of investments declined...

Asset under moratorium (by value) was at | 7977 crore as on September 2020 (~1.48% of AUM). Asset quality improved with GNPA ratio down ~6 bps QoQ to 1.81% (GNPA - | 8511 crore vs ~| 8631 crore QoQ). GNPA in the non-individual portfolio deteriorated to 4.19% vs. 4.1% in June 2020. Individual portfolio GNPA came in a tad lower by ~8 bps QoQ to 0.84%. Excluding asset classification norms, overall GNPA ratio would be 1.83% with individual/corporate non-performing loans at 0.88% and 4.19%, respectively. As of September 2020, collections efficiency for individual loan...