Jan 25, 2013, 03.26 PM IST | Source: Moneycontrol.com

Hold Housing Development Finance Corporation: Ventura

Ventura Securities has maintained hold rating on Housing Development Finance Corporation (HDFC) in its January 24, 2013 research report.

Ventura Securities has maintained hold rating on Housing Development Finance Corporation (HDFC) in its January 24, 2013 research report.

“Housing Development Financial Corporation’s (HDFC) revenues were higher by 19.2% YoY and 2.1% QoQ at Rs 5538.4 crore aided by the strong loan book and stable NIM’s (4.1%, 110bps YoY). Net profit for the quarter increased by 28.9% YoY to Rs 1354.2 crore. Net Interest Income grew by 19.0% yoy to Rs1626.7 crore. The company registered a YoY growth of 22% (4% QoQ) in outstanding loans to Rs1,60,941 crore. Sanctions and disbursements were equally strong, registering 18% and 19% growth respectively, compared to Q2FY12.”

“The growth in retail loan book was 25% net of loans sold and accounted for 85% of the increase in the total loan book, whereas the corporate book grew by 17% YoY. Individual loans sold amounted to Rs 5260 crore in Q3FY13. The retail-corporate loan mix currently stands at 65:34. HDFC continues to report a stellar performance in asset quality. As per the management, standard asset provision for retail and non-retail loans increased in FY12. The incremental provision was charged to the P&L account. The company currently holds provisions of Rs 1780 crore on the balance sheet versus the regulatory requirement of Rs 1490 crore. Of these, provisions for standard assets including Dual Rate Home Loan scheme comprise Rs 1276 crore and the rest is with respect to NPAs. GNPA trends in the non-retail segment are also healthy, with headline NPAs remaining more or less stable at 0.91% (0.89% in Q2FY13).”

“Regardless of intensifying competition, HDFC has been clocking strong growth in its loan book, with retail business driving the growth. HDFC’s robust credit growth, healthy fees and strong asset quality are likely to drive growth further. NIMs and the RoA too continue to remain impressive. We maintain our positive outlook on the stock. At the CMP of 807, the stock is currently trading at 5.2x P/Adj BV and 4.6x P/Adj BV for FY14E and FY15E and recommend a hold on the stock,” says Ventura Securities research report. 

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