Accumulate HDFC; target of Rs 813: KRChoksey

KRChoksey is bullish on Housing Development Finance Corporation (HDFC) and has recommended buy rating on the stock with a target of Rs 813 in its October 23, 2012 research report.

“HDFC delivered another consistent operating performance with PAT of Rs1151 crore growing by 18.6% y-o-y & 14.9% q-o-q in line with our expectation. Core PAT (excluding capital gains) increased 19.1% y-o-y & 9.5% q-o-q. NII grew 11.5% y-o-y & 6.3% q-o-q to Rs 1386 crore led by healthy loan (including loan sold) growth 26.6% y-o-y. Lending spreads have been stable ~ 2.27% reflecting healthy pricing power and housing loan demand. Loan book excluding loan sold grew 22.2% y-o-y & 5.0% q-o-q supported by strong growth in retail loan book (6.9% Q-o-Q). Approvals and disbursements growth were 18% & 21% respectively in 1HFY13 reflecting steady housing loan demand.”

“NII grew impressively 11.5% Y-o-Y & 6.3% Q-o-Q driven by strong loan book growth (26.6% y-o-y) & stable spreads. Lending spreads have been stable at 2.27% during the quarter. Loan book incl. sell- downs grew by 26.6% y-o-y to Rs 160758 crore. We believe HDFC continues to maintain spread in the range of 2.2% -2.3%, going forward. We model in 20.7% CAGR in loan book over FY12-14 driven by retail and wholesale business. Trading gains were Rs94 crore vs Rs20 crore in Q1FY13, boosted profitability. Dividend income increased 22% Q-o-Q to Rs194 crore mainly due to dividend income from HDFC bank. Unrealized gains increased 15.4% q-o-q to Rs 31,161 crore.”

“Loan book net of loan sold grew by 26.6% y-o-y to Rs 1,53,240 crore driven by individual loan book (31% y-o-y) and wholesale loans (19% y-o-y). HDFC bank sold Rs2580 crore individual loans to HDFC bank during the quarter. HDFC has sold Rs5,630 crore in the last 12 months; off balance sheet book stood at Rs15748crore (up 20% y-o-y). Retail and wholesale loan book mix (before adjusting loan sold) stood at 65% & 35% respectively. We have fine tuned our FY13 & FY14 earnings estimates factoring lower trading gains. Hence, we upgrade to accumulate rating on the stock with target price of Rs813,” says KRChoksey research report.

Bodies Corporate holding more than 50% in Indian cos

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

To read the full report click on the attachment

Read More