Motilal Oswal is bullish on Housing Development Finance Corporation (HDFC) and has recommended buy rating on the stock with a target of Rs 919 in its January 22, 2013 research report.
“HDFC reported PAT of INR11.4b for 3QFY13, in line with our estimate, while core operating performance was better than expected (NII 5% higher than our estimate), lower than estimated trading profits and dividend income led to marginal deviation in profitability.”
“AUM grew 21.5% YoY and 3.6% QoQ to INR1.77t. Corporate loans were flat QoQ; the entire quarterly increase in AUM came from retail (individual) loans. The AUM mix remains skewed in favor of retail loans, which constituted 69% of AUM (v/s 67% a quarter ago). Muted corporate loan growth (+7% YoY in 9MFY13 v/s 19% retail and 14% overall) not only impacted disbursement growth (+10% YoY in 9MFY13) but also fee income growth (down 25% YoY in 9MFY13). Reported overall spread was largely stable (9M v/s 1H) at 2.28%, with individual spread at 1.95% (1.96% in 1H) and corporate spread at 2.79% (2.72% in 1H). GNPA on 90-day overdue basis declined to 75bp from 77bp QoQ. Segmentwise, GNPA was 62bp (65bp a quarter ago) in the individual segment and 91bp (89bp a quarter ago) in the corporate segment.”
“We believe valuations are reasonable, considering HDFC's growth potential, sound business fundamentals, and substantially improved subsidiaries' performance (Life Insurance has turned profitable). Maintain Buy with an SOTP-based target price of INR919,” says Motilal Oswal research report.
FIIs holding more than 30% in Indian cos
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