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Last Updated : Nov 05, 2019 10:53 AM IST | Source: Moneycontrol.com

HDFC beats estimates for September quarter: should you buy, sell or hold?

Experts are of the view that the long-term potential of HDFC is intact. The stock is a must for investors looking at companies that can deliver growth without compromising safety.

 
 
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Most global firms have maintained their buy rating on HDFC Ltd after standalone net profit of India’s largest mortgage lender rose 60.5 percent year-on-year (YoY) for the quarter ended September.

The company reported a profit of Rs 2,467.08 crore in the same quarter in 2018.

HSBC has the most aggressive target price of Rs 2,700 on HDFC, which translates to a rise of over 23 percent from November 4’s closing price of Rs 2,181.

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Experts are of the view that the long-term potential of HDFC is still intact. The stock is a must for investors looking at companies that can deliver growth without compromising on safety.

“We remain confident of HDFC’s business model and its ability to grow amid tough times; however, we will keep a close eye on the margin and asset-quality trends,” Emkay Global said in a report.

“We roll forward our estimates to FY22 and reiterate Buy with a revised TP of Rs2,466 (Rs2,421 earlier), corresponding to ~2.4x FY22E standalone P/B,” it said.

HDFC Ltd

Here’s how global brokerages reacted post-HDFC Q2 results:

Credit Suisse: Outperform| Target raised to Rs 2,500 from Rs 2,280

Credit Suisse maintained its outperform rating on HDFC Ltd after the September quarter results but raised its target price to Rs 2,500 from Rs 2,280.

Valuations were fairly attractive at current levels as the stock was trading at 1.7x FY21e core P/B. The growth was likely to remain stable, it said while remaining cautious on corporate growth.

The global investment bank slashed its FY20-21e EPS by 3-1 percent on higher opex.

Morgan Stanley: Overweight| Target Rs 2,600

Morgan Stanley maintained its overweight rating on HDFC Ltd, with a target of Rs 2,600.

The global investment bank was positive on the strong underlying NII growth and individual AUM growth. Fees & securitisation income were lower than estimated.

Corporate NPLs increased, which was largely expected. The company used one-off capital gains to strengthen provision coverage.

Citigroup: Buy| Target Rs 2,570

Citigroup maintained its buy rating on HDFC Ltd, with a target price of Rs 2,570.

The Q2 profit was higher than estimates on account of lower tax. The Tier-1 ratio remained strong at 18.1 percent.

The quarter benefitted from part stake sale and dividend income from HDFC Bank. It was favorably positioned, compared to its peers, given its strong franchise.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Nov 5, 2019 10:53 am
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