What should investors do with HDFC post Q4 results: buy, sell or hold?

The board of directors recommended a dividend of Rs 23 per equity share for the financial year 2020-21.

May 10, 2021 / 09:27 AM IST
 
 
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Housing Development Finance Corporation (HDFC) share price rose in early trade on May 10 after the company announced its March quarter earnings.

On May 7, the company reported an 8.7 percent sequential growth in the March quarter profit at Rs 3,180 crore, beating estimates. Net interest income (NII) fell 0.1 percent to Rs 4,065 crore in Q4 FY21 from Rs 4,068 crore in the previous quarter.

Housing Development Finance Corporation said the board of directors recommended a dividend of Rs 23 per equity share for the financial year 2020-21.

Also Read - HDFC Q4 profit rises 8.7% to Rs 3,180 crore QoQ, beats estimates

Here is what brokerages have to say about the stock and company after the March earnings:

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Motilal Oswal | Rating: Buy | Target: Rs 3,275

Q4 FY21 was a strong quarter on all fronts. Disbursements have been picking up MoM and have exceeded YoY levels over the past quarter. With the declining cost of funds and a reduction in excess liquidity on the balance sheet, margins should be stable despite pressure on retail lending yield.

ICICI Direct | Rating: Buy | Target: Rs 3,100

We remain positive on earnings visibility given business growth led by market leadership, adequate capital of 22.2%, funding advantage and healthy provision buffer. The healthy performance of subsidiaries aided consolidated earnings. Stake sale in HDFC Ergo (to reduce stake as per regulatory regime) could lead to one-off inflows. We expect earnings to grow at 14.6% CAGR in FY21-23E with healthy RoA at 2.2% in FY23E.

Prabhudas Lilladher | Rating: Buy | Target: RS 3,094

We upgraded HDFC to a buy during the previous quarter and the company's FY21 performance only vindicates our stance. We factor improved non-interest income performance with subsequent EPS uptick of 3%/6% over FY22/23E. Therefore, we maintain core book multiple at 3.2x PABV MAR’23E.

Sharekhan | Rating: Buy | Target: Rs 3,100

The stock has corrected 13% from its recent highs, and we believe risk-reward is favourable for long term investment. We believe that the consistency and relative outperformance of HDFC will help it sustain growth as well as valuations.

CLSA | Rating: Upgrade to buy from outperform rating | Target: Rs 3,000

The incremental risk/reward is favourable. NBFC saw a steady Q4 with core NII/pre-provisional profit up 14-15% YoY. The asset quality performance was strong.

JPMorgan | Rating: Overweight | Target: Rs 2,860

The loan disbursements were up sharply with asset quality largely in control. The key highlight of the result is a sharp pick-up in disbursement in Q4.

Macquarie | Rating: Outperform | Target: Rs 2,835

The asset quality has been stable in a tough year. The AUM growth is below estimates due to weak growth in the non-individual book. The core price-to-book value at 1.7x FY23e is cheap.

HSBC | Rating: Buy | Target: Rs 2,900

The Q4 operating performance was in line with our expectations. The OP performance buoyed by strong disbursements momentum in individual loan. The asset quality remained stable QoQ. We trim FY22/23 estimates on lower growth.

At 09:17 hrs, Housing Development Finance Corporation was quoting at Rs 2,522.20, up Rs 25.95, or 1.04 percent on the BSE.

The share touched a 52-week high of Rs 2,895.35 and a 52-week low of Rs 1,486.45 on 16 February 2021 and 26 May 2020, respectively.

Currently, it is trading 12.89 percent below its 52-week high and 69.68 percent above its 52-week low.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Moneycontrol News
first published: May 10, 2021 09:27 am

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