Buy Housing Development Finance Corporation; target of Rs 3589: Sharekhan

Sharekhan's research report on Housing Development Finance Corporation

HDFC’s PAT beat street expectations at Rs. 3,261 crore, up 11% y-o-y (but down ~14% q-o-q), led by strong individual loan growth (up by 16% y-o-y). Overall, AUM grew by 12% y-o-y and 4% q-o-q. •We expect all its business segments – individual, corporate, LRD, and construction finance to perform better going ahead. The management sounded optimistic about the strong pipeline for construction finance and LRDs and expects a positive growth in the non- individual book. Credit costs continued to decline, coming in at 7 bps in Q3FY22 versus 9 bps in Q2FY22. NPLs witnessed deterioration on account of revised guidelines of NPA recognition by the RBI.

Outlook

We maintain a Buy rating on HDFC with an unchanged SOTP based PT of Rs. 3,589.