Buy HDFC; target of Rs 2900: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal's research report on HDFC

HDFC reported a PAT of INR44.5b in 2QFY23 (5% beat), up 18% YoY, primarily driven by a lower effective tax rate of ~18% (because of higher dividend income). Core PPOP grew 15% YoY to INR43.8b. Margin was stable QoQ at 3.4% in 1HFY23. Credit costs fell by ~4bp QoQ to ~32bp, aided by a decline of ~20bp in GS3 and resolutions in the nonIndividual segment.  Disbursements in the Individual segment grew 36% YoY to INR440b. Individual/total AUM rose 20%/16% YoY, with Individual loans comprising ~81% of AUM. The management said it has a healthy pipeline in Construction Finance (CF) and LRD, and expects growth in the NonIndividual segment to accelerate in subsequent quarters. With the merger announced, taking a view in isolation is difficult.

Outlook

However, we feel that HDFC continues to have a strong ‘right to win’ in its standalone Mortgage business. We maintain our Buy rating on the stock with a TP of INR2,900 (premised on Mar’24E SoTP).

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HDFC - 04-11-2022 - moti