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HDFC Q1 preview: Profit expected to fall, but NII may show improvement

IDBI Capital Markets & Securities expects a 44 percent year-on-year (YoY) fall in HDFC's Q1 PAT while it expects the NBFC lender's NII to rise 12.5 percent.

July 30, 2020 / 09:27 AM IST
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Non-banking financial heavyweight HDFC will release its June quarter numbers on July 30 in which it is likely to report a rise in net interest income (NII), but PAT may see a decline.

Other than the numbers, the outlook on asset quality, especially on non-individual loans and moratorium books will be in the focus.

IDBI Capital Markets & Securities (a wholly-owned subsidiary of IDBI Bank) expects a 44 percent year-on-year (YoY) fall in HDFC's Q1 PAT while it expects the NBFC lender's NII to rise 12.5 percent.

Brokerage firm Motilal Oswal Financial Services expects a 9 percent YoY AUM growth for the company driven by non-retail lending.

The brokerage sees an incremental cost of funds at nearly 6 percent from capital markets. HDFC's Q1 PAT, as per Motilal Oswal, may fall 26 percent YoY.


Motilal expects a 6.9 percent YoY growth in HDFC's Q1 NII. However, core income may see a mild drop of 0.6 percent YoY.

Core operating profits and core PBT may slip by 0.4 percent and 0.6 percent YoY, respectively.

On the other hand, Kotak Institutional Equities expects HDFC to report a 10 percent YoY growth in NII while NIM may slip 5 bps YoY.

HDFC's provisions may see a rise of 39.3 percent YoY and PAT is likely to drop 7.5 percent YoY, Kotak said.

As per Kotak, HDFC booked capital gains of Rs 1,240 crore on stake sale in HDFC Life and the brokerage expects the company to make equivalent provisions to boost its ECL coverage.

Dividend income of Rs 298 crore, which was nil in Q1FY20, and fair value gain of Rs 33.4 crore against the loss of Rs 45 crore in Q1FY20, will likely support earnings, Kotak said.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
Moneycontrol News
first published: Jul 30, 2020 09:27 am
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