Accumulate HDFC: Ventura

Ventura is bullish on HDFC and has recommended accumulate rating on the stock in its July 11, 2012 research report.

“HDFC came out with numbers which were in line with expectations alleviating fears of competition intensifying in the housing finance market. While the corporate segment did show a slight dip, it was more than made up for by the individual loan portfolio growing at 22.5% yoy. Asset quality NIMs and the RoA continue to remain impressive. We continue to maintain a positive outlook on the stock and given the strong 20% growth in disbursals, we believe that the company can easily achieve a loan growth of 18-20% over the next couple of years. The stock is currently trading at 3.8x P/Adj BV and 3.3x P/Adj BV for FY13 and FY14 and recommend an accumulate on dips strategy.”

“Housing Development Financial Corporation’s (HDFC) revenues were higher by 29.3% yoy at Rs. 4914 crore aided by a 19.4% yoy growth in loan book to Rs 1,48,262.3 crore and stable NIM’s (2.9%, +17 bps yoy). Spreads on the loans remained flat at 2.3 (-3 bps). Net profit for the quarter increased by 18.6% yoy to Rs 1001 crore. Net Interest Income grew by 26% yoy to Rs.1258.2 crore. Loan growth at 19% yoy was commendable given that it sold loans to HDFC Bank. Adjusted for this sell down the loan growth would have been far higher at 23%. Although the corporate loan book did slow down to 14% yoy, this was more than made up by the 23% growth in retail lending."

"The strong growth in sanctions (+17% yoy) and disbursals (+20%) gives us adequate comfort and we believe that HDFC will easily achieve its guidance of 18-20% loan growth over the next couple of years. Asset Quality continues to remain exemplary with GNPLs improving to 0.9%. However the provisioning expenses for the company have increased as it has changed its policy of charging the provisioning on standard assets to the P&L (instead of routing through the reserve and surplus account),” says Ventura research report.  

Bodies Corporate holding more than 50% in Indian cos

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