What should investors do with HDFC after June quarter results: buy, sell or hold?

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Housing Development Finance Corporation (HDFC) share price was up over a percent at open on August 3, a day after the company declared its June quarter results.

HDFC on August 2 posted a 1.7 percent fall in its Q1FY22 standalone net profit at Rs 3,000.7 crore. The company had posted a profit of Rs 3,051.5 crore in the year-ago period.

The profit number was above the market estimates, as a CNBC-TV18 poll of analysts had expected Q1 profit at Rs 2,898.7 crore. Total revenue from operations for the quarter came at Rs 11,657.47 crore, down 10.45 percent from Rs 13,017.68 of Q1FY21.

Also read: HDFC Q1 results: Net profit falls 1.7% to Rs 3,000.7 crore, NII up 22% at Rs 4,146.7 crore

HDFC's Q1 net interest income (NII) stood at Rs 4,146.7 crore compared to Rs 3,392 crore in the previous year, representing a growth of 22 percent.

Net interest margin (NIM) came at 3.7 percent. Capital adequacy remained at 22 percent, while tier-1 capital remained at 21.3 percent.

As of June 30, 2021, the assets under management (AUM) stood at Rs 5,74,136 crore as against Rs 5,31,186 crore in the previous year.

The stock was trading at Rs 2,505.00, up Rs 42.70, or 1.73 percent. It has touched an intraday high of Rs 2,513.50 and an intraday low of Rs 2,485.00.

Here is what brokerages have to say about the stock and the company after Q1 earnings:

Morgan Stanley: Rating: Overweight | Target: Rs 3,160

NII and Core PPoP growth were strong, individual AUM growth picked up. Non-individual AUM growth is likely to be subdued for a longer term. Stage 2+3 loans appear to have peaked. We trim FY 22/23 EPS estimates by 6%/5%.

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CLSA: Rating: Buy | Target: Rs 3,000

Strong NIM aids PPoP, asset quality deteriorates marginally. The core business outlook has improved and valuations are reasonable.

Kotak Institutional Equities: Rating: Buy | Target: Rs 3,100

Strong performance in Q1 with stable NIM. Marginal rise in stressed loans despite a challenging business environment. Lower disbursements in April and May tempered retail loan growth. The company remains the best mortgage play in India. Improving realty cycle, strong debt market position makes it a favoured pick in the sector. It has large provisioning buffers on the balance sheet and valuations are favourable.

Macquarie: Rating: Outperform | Target: Rs 2,960/Sh

Asset quality remains the biggest plus point. Weaker loan growth is due to a decline in the non-individual book. The stock is cheap at current levels.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.