Housing Development Finance Corporation Ltd. share price target

HDFC has registered 61% surge in the net profit to Rs 3961.53 crore in the quarter ended September 2019 (Q1FY2020), driven by dividend income and the profit on sale of investments on part stake sale of GRUH Finance of Rs 1627.09 crore. The company has maintained stable margins and spread, while improved expense ratio. The overall revenue growth of the company was boosted by dividend income of Rs 1074 crore in Q2FY2020 compared to Rs 6 crore in Q2FY2019, as dividend from HDFC Bank (Rs 865 crore) and GRUH Finance (Rs 70 crore) was received in the second quarter of the FY2020 as against the first quarter in the previous financial year....

Asset quality was stable during the quarter with GNPA ratio up ~4 bps QoQ to 1.33% (GNPA - ~| 5655 crore), led by slippage in non-individual GNPA. The non-performing loans in the non-individual portfolio increased ~19 bps to 2.87%, at multi year high. Individual portfolio continue to remain steady at 0.73%. Assets classified into Stage 3 category came in at | 6685 crore vs....

HDFC's Q2FY20 numbers have come in pretty stable and in line with our estimates with a 12% YoY growth in its loan book. PAT has grown by 60% YoY driven by high dividend income and treasury gain on stake sale in Gruh. The Non-Individual book growth remained calibrated at ~4%, while Individual book grew ~16%. Despite the challenges in its core housing finance business, company is able to garner its individual book and maintain asset quality at decent levels. We expect the same trend to continue and return ratios to improve once normalcy returns within the sector. Hence, we give ACCUMULATE rating on the stock with a SOTP based TP of Rs2,475 valuing parent...

deterioration in asset quality during Q2 led by corporate loan slippages with early bucket movement. While this may not prove worrisome as the Co. Led by one-offs and effective liability management, HDFC's earnings beat performance stood somber as Management maintains caution on corporate...

Core PPoP rose 5% YoY to INR29b in 2QFY20. However, led by higher dividend income from subsidiaries and associates (INR10.8b v/s INR58m in 2QFY19) and a low tax rate (13%), PAT grew 60% YoY to INR39.6b. Excluding the lumpy stake sale and dividend income, our calculations suggest core PBT was flat YoY in 2Q and up ~6% YoY in 1HFY20. AUM was up 3% QoQ/13% YoY at INR4.9t and continued to be driven by individual loans (+4%QoQ/17% YoY to INR3.7t). On the other hand, corporate segment AUM was flat QoQ (+4% YoY) with management...

Loan Book HDFC Ltd has grown it's book at a CAGR of ~16% over last 5 fiscals mainly supported by growth in individual book which grew at a CAGR of ~17%. 1QFY20 also saw similar trend with AUM growing at 13% driven by 17% growth in individual loans. HDFC Ltd book size is `4,166 bn with individual book comprising 74%, construction finance 12%, lease rental discounting 9% and corporate 5%. Asset Quality HDFC Ltd has seen GNPA ratio increasing from 0.67% in FY15 to 1.29% in 1QFY20 largely driven by increase in GNPA ratio in...

Housing Development Finance Corporation Limited provides housing finance to individuals and corporates in India. HDFC also provides construction finance to real estate developers and provides lease financing...

We believe the slew of measures taken by the government and the regulator is likely to benefit strong HFCs such as HDFC, which is likely to see improved appetite for its borrowing requirements, which presents the company with an opportunity to optimise its cost of funds. This will likely see less pressure on its pricing, with possibility of improvement of spreads from Q1 levels. Positive business growth fundamentals would support strong earnings growth and help the company sustain its valuation premium as compared to peers. We believe the outlook for HDFC has improved with supportive government...

HDFC's Q1FY20 numbers came in a little weak owing to slower growth in its loan book (11% YoY). PAT although has grown by 46%, is 7% below our estimates. Growth in PAT is however, attributable to one-time gain of Rs18.9bn from stake sale in Gruh. The NonIndividual book growth was calibrated at 2%, while Individual book grew 15%+. Spreads were under pressure and GNPA increased by 11bps sequentially to 1.29%. Given the challenges in its core housing finance business, we expect the normalcy could take time to come around. Hence, we retain our REDUCE rating on the stock with a SOTP based...

Asset quality witnessed marginal deterioration with GNPA ratio up ~11 bps QoQ to 1.29, led by slippage in non-individual GNPA. The non-performing loans in non-individual portfolio increased ~34 bps to 2.68%, a level not seen in past several quarters. Individual portfolio also witnessed an increase of ~2 bps QoQ in GNPA ratio to 0.72%. Assets classified in Stage 3 category came at | 6228 crore vs. | 5743 crore in Q4FY19 & | 5022 crore in Q1FY19. Operational performance remain stable due to higher other income & healthy NII. Other income was aided by extraordinary gains from stake sale...