Buy HDFC; target of Rs 3290: Motilal Oswal

Motilal Oswal is bullish on HDFC recommended buy rating on the stock with a target price of Rs 3290 in its research report dated May 05, 2023.

Broker Research

May 07, 2023 / 10:57 IST

buy

Motilal Oswal's research report on HDFC

HDFC 4QFY23 reported PAT grew 20% YoY to INR44.3b (13% beat), aided by a) NIM expansion and b) Higher assignment income. Core PPOP grew 16% YoY to INR53.4b. NIM expanded sequentially by ~10bp with FY23 NIM at 3.6% (v/s 3.5% as on 9MFY23). Credit costs increased ~4bp QoQ to ~29bp. Disbursements in the Individual segment were slightly below INR500b in 4QFY23. Individual/total AUM rose 17%/11% YoY, with Individual loans comprising ~83% of AUM. The management shared that it has not witnessed any perceptible change in demand for mortgages, despite the high interest rates and that a large proportion of customers have seen only their tenor increase rather than any EMI increase. HDFC achieved its highest ever monthly disbursements in Mar’23 and expects this positive momentum to continue throughout FY24. Commentary on the existing mortgage demand has been divergent across the different lenders in the mortgage ecosystem.

Outlook

HDFC continues to have a strong ‘right to win’ in its standalone Mortgage business. We reiterate our BUY rating on the stock with a TP of INR3,290 (premised on Mar’25E SoTP).

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