Buy HDFC; target of Rs 2287: Prabhudas Lilladher
Prabhudas Lilladher is bullish on HDFC has recommended buy rating on the stock with a target price of Rs 2287 in its research report dated July 30, 2018.
September 18, 2018 / 04:51 PM IST
Prabhudas Lilladher's research report on HDFC
HDFC's loan asset growth of 19% YoY was better than expectations of 18% YoY driven from both individual & non-individual but same was visible in NII growth of 21% YoY as (i) impact from IND-AS accounting on interest expenses (Rs1.1bn of impact) and (ii) slightly lower spreads on individual loan book. HDFC under the IND-AS accounting recognized certain weak standard assets under the Gross Stage 3 exposure (2.5% of assets) leading to utilizing the floating provisions to maintain PCR at 28%.
We see slight spread pressure in near term but HDFC has already taken increase in PLRs keeping spreads in tight band and asset growth is expected to be better. Maintain BUY with TP of Rs2,287 (up from Rs2,228) based on SOTP valuation with HDFC valued at 2.9x.
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