Here's why brokerages have upgraded HDFC post 32% jump in net profit
HDFC is seeing strong growth in housing loan disbursement leveraging demand. High buffer provisions at 1.3% helps bring down credit costs.
India’s largest home loan lender HDFC (Housing Development Finance Corporation) reported a net profit jump of 31.7% to Rs 3,780.5 crore in Q2FY22 as compared to Rs 2870.1 crore in the same quarter a year-ago period. Profit in the corresponding quarter of the previous year stood at Rs 2,870.1 crore. Even the NII (net interest income), the difference between interest earned and interest expended, grew by 12.7% to Rs 4,108.5 crore compared to year-ago period.
As at September 2021, the assets under management (AUM) stood at Rs 5,97,339 crore as against Rs 5,40,270 crore in the previous year, registering a 10.6% growth YoY. The quarter-on-quarter growth was 4% in AUM.
After posting such strong growth shares of the corporation were trading flat with a negative bias of 0.04 % to Rs 2,886. However, analysts on the street are bullish on the counter. Here is what they have to say.
Jeffferies | Rating: Buy | Target: Rs 3,480
HDFC’s Q2 profit was a tad ahead of estimates. Seeing strong growth in housing loan disbursement leveraging demand. High buffer provisions at 1.3% helps bring down credit costs.
Morgan Stanley | Rating: Buy | Target: Rs 3,340
Individual disbursement and AUM (asset under management) is strong, even the non individual loans expanded QoQ. Stage 2 &3 loans declined QoQ while provisioning coverage remains stable. The global brokerage firm has trimmed forecast but lift target due to higher subsidiary valuations.
Credit Suisse | Rating: Buy | Target: Rs 3,200
Asset quality position remains very strong with gross non-performing assets at 2% one of the lowest in the industry. Loan growth picking up and non-individual book growth to improve further. Increase EPS (earnings per share) by 1-2% and target price to Rs 3,200.
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