Hold HDFC; target of Rs 1056: ICICIdirect

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26 Aug, 2025 12:21

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ICICIdirect.com's report on Housing Development Finance Corporation (HDFC) HDFC’s standalone PAT came in at Rs 1357 crore, up 7.2% YoY, below our estimate of Rs 1433 crore mainly owing to higher taxes. However, the operational performance was better than expected with operating profit, PBT increasing 16% & 15%, respectively, YoY

Advances traction was in-line at 15% YoY to Rs 212344 crore (including loans sold it was 19% YoY) mainly led by individual loan book (up 16% YoY). Corporate loan book traction stood at 11% YoY.

As estimated, NIMs improved to 4% vs. 3.8% in Q1FY15. NII growth was better at 22% YoY to Rs 1783 crore. Asset quality stayed steady QoQ with GNPA ratio at 0.69% "HDFC has commanded premium valuations over the years due to its consistent track record in earnings and business growth. Return ratios have remained healthy across economic cycles with RoE >20% and RoA >2.5%. We expect this to be maintained over FY14-16E. The consolidated PAT as on FY14 stood at Rs 7948 crore with subsidiaries contributing 32%. Even consolidated RoEs have been healthy at ~21%. Over FY14-16E, we expect standalone earnings CAGR of 14% to Rs 7013 crore. We maintain our SOTP based target price of Rs 1056. We continue to value the standalone housing finance business at 3x FY16E ABV. Maintain HOLD", says ICICIdirect.com research report.

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