Housing Development Finance Corporation (HDFC) is likely to report healthy earnings growth for the July-September quarter due to dividend from HDFC Bank and stake sale in GRUH Finance. But deferred tax assets (DTA) adjustment and mark-to-market (MTM) loss on its investment in RBL Bank may limit profit growth.
"Dividend from HDFC Bank (Rs 870 crore), capital gains from stake sale in GRUH Finance (Rs 1,630 crore), MTM loss on investment in RBL Bank (Rs 270 crore) and DTA impairment (Rs 275 crore) are one-offs for Q2," Kotak Institutional Equities said. The brokerage expects profit growth at 54 percent and pre-provision operating profit (PPoP) at 41 percent YoY.
Net interest income and loan growth could remain in double-digit (around 14-17 percent YoY) during Q2. Brokerages expect corporate loan growth to be slow in Q2.
"We expect HDFC to deliver 15 percent YoY growth in loans under management on the back of 17 percent growth in the retail business (17 percent in Q1 FY20)," Kotak Institutional Equities said, adding the decline in marginal cost of funds will drive 10 bps QoQ expansion in calculated NIM.
Edelweiss, which sees profit and PPoP growth of more than 50 percent YoY, said individual loan growth momentum would be 14-16 percent in Q2 FY20 though conservative stance on corporate book would lead to AUM growth of 12-14 percent. "We estimate NII growth of 15-16 percent YoY," it added.
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