Accumulate HDFC on declines, says Mayuresh Joshi

Mayuresh Joshi of Angel Broking told CNBC-TV18, "Housing Development Finance Corporation's (HDFC) numbers did disappoint in terms of how the loan growth came through, individual growth was around 17 percent, the corporate growth is something that disappointed the street, so spreads largely inline at 2.33 percent, margins at 3.95 percent were a tad disappointing because the yield on investments probably did not offset the cost of the fall in the cost of funds.""When you are talking about the long-term story we still believe in net interest income (NII) growth of 11-12 percent coming through. We expect advance growth of 15 percent and clearly if you adjust for the value of subsidiary specifically in the case of HDFC, that amounts close to around Rs 482. So, if you look at the price to adjust at book at 4.5 times, looks a tad bit expensive, but the premium valuation stays with HDFC. So, again at Rs 1,110-1,150 odd kind of levels one can accumulate and hold on three to five years," he added. "Alternatively LIC Housing at the current declines looks extremely good over the next year’s timeframe. Our take is cost of funds have gone down substantially for LIC Housing close to that 9.2-9 percent mark. These spreads have been quite decent, the margin expansion at 2.56 percent with advances on the individual side which contribute almost 97 percent of the topline growing at 18 percent.""Our own take is advances growing to the tune of 18.5 percent which will lead to earnings growth of 20-20.5 percent. Even at the current juncture at 2.3-2.4 times price to adjusted book the stock looks quite attractively placed compared to HDFC at the current juncture. So, alternatively LIC Housing can also be looked at with a year’s timeframe for a target of Rs 571," he said.