HDFC's credit growth unlikely to slip below 15-16%: Angel

37277 Investors following HDFC. Share this News with them.

0

Like this story, share it with millions of investors on M3

HDFC's credit growth unlikely to slip below 15-16%: Angel

In an interview to CNBC-TV18, Vaibhav Agrawal of Angel Broking analyses HDFC's numbers and what his brokerage's call is on the stock right now.

Post your opinion here

 

0

Tweet

Share on Tumblr

Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » ALSO READ News and Notices about HDFC See interviews with HDFC Management See what other Experts & Brokerages are saying about HDFC See previous Results of HDFC HDFC BSE | NSE 29/05/12 Are Mutual Funds betting on HDFC?

Housing Development Finance Corporation's ( HDFC ) net profit grew at a slower pace of 10% year-on-year to Rs 891 crore in the third quarter. This is on the back of lower investment income and higher interest cost. The total income rose 35% to Rs 4,473 crore from 3,321 crore a year back.

A CNBC TV18 estimate showed a 13% rise in net profit.

Read HDFC's Q3 result details here.

In an interview to CNBC-TV18, Vaibhav Agrawal of Angel Broking analyses HDFC's numbers and what his brokerage's call is on the stock right now.

Below is an edited transcript. Watch the accompanying video for more.

Q: What is your sense of the lower profitability? Were you expecting a slight off consensus figure or is it along your expectations?

A: We have to see what the core profitability trends have been and those have been very stable. Spreads have been very stable right across the last several quarters. There is nothing much to complain about. Even the loan growth is holding up at 20% and it is quite positive as such. So, on the core profits there is no surprise really. The gap is purely attributable to the investment gains coming in lower. I don't think that is such a big deal. On the fundamentals there is nothing really to complain about.

Q: At Rs 981 crore what is your opinion on the stock in terms of valuation?

A: The core profitability and fundamentals of HDFC remain strong and it is perceived as a bit of a defensive in the sector. So probably in the near-term that character would continue to play out. However, valuations are too expensive for us to really have a buy at this juncture. We remain neutral from a medium-term point of view.

Q: The entire loan book has gone up from Rs 1 lakh crore or Rs 1,09,000 crore a year ago to Rs 1,32,000 crore. It looks like it's maintained its 25% or 27% loan book growth. Would that be a something we should take home as important for the banking sector credit growth? Is this growth giving you any indication of what the trend in the banking sector itself will be?

A: Yes that is a bit of a positive surprise especially because home loan is considered one of the segments which is more interest sensitive than the rest of the sectors. Considering the growth is holding up in that segment, it goes with our basic call as well for the sector as a whole that credit growth is unlikely to slip below 15-16%. Until it remains at those kinds of levels, we believe that the operating profitability of the sector would remain strong to manage the NPA issues that are likely to crop up.