Prabhudas Lilladher is bullish on HDFC has recommended buy rating on the stock with a target price of Rs 2266 in its research report dated January 29, 2019.
Prabhudas Lilladher's research report on HDFC
While the knowns in the form of higher base (listing gains from insurance biz:Q3FY18 & likewise from AMC listing: Q2FY19) dragged HDFC's PAT to Rs 21bn (PLe: 26bn), the miss came on account of lower than anticipated growth and elevated GNPAs (non-individual side). Subsequently, PPoP took a beating de-growing 61% YoY, however, low provisioning requirement supported the bottom-line. Loan growth of 17% YoY in individual loan book stood decent, but non-individual side slowed down for the quarter. Slight moderation in spreads both on individual and non-individual book as Q3 proves to be a dampener, reported NIMs stood healthy at 3.5% up from 3.3% a quarter ago given the timely PLR hikes. Incorporating market apprehensions, we envisage 16% loan growth for FY19 and 17-18% over FY20-21E, we tweak our credit costs and GNPA estimates moderately higher as we stand wary of the non-individual portfolio. These should have a bearing on RoAs and we reckon the same should move in the range of 2.2-2.3% over next two years. While superior track record and resilient balance sheet prompt us to reiterate BUY, we closely monitor the du-pont metrics for the non-individual business.
Our TP at Rs2,266 based on SOTP metrics values HDFC at 2.7x at Sep-21 PABV.
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