HDFC’s Target Price Hiked After Q2 Net Profit Beats Estimates
Analysts hiked target price for Housing Development Finance Corporation Ltd. after net profit of India's largest mortgage lender beat estimates in the quarter ended September.
Net profit rose 60.5 percent over the last year to Rs 3,961 crore in the July-September period, according to an exchange filing.
Also, muted growth in the corporate loan book and a marginal rise in bad loans in the segment didn't worry analysts as they maintained bullish investment recommendation on the company.
Gross non-performing assets rose marginally to 1.33 percent from 1.29 percent in the previous quarter. NPAs in the individual book, however, remained stable. And its non-performing loans in the non-individual book rose to 2.87 percent from 2.68 percent in the April-June quarter.
Also Read: Developers Can Get Last-Mile Funding If RBI Tweaks NPA Norms, Says HDFC's Keki Mistry
Here's what brokerages have to say about HDFC Q2 Results 2019-20:
HSBC
- Maintains ‘Buy' with a target price of Rs 2,700 apiece.
- Moderation in wholesale loan growth overshadows healthy growth in core individual home loans.
- Stable asset quality with improving provision coverage ratio provides comfort.
- Retains HDFC as preferred housing finance company.
Emkay Global
- Maintains ‘Buy' and hikes target price to Rs 2,466 from Rs 2,421 apiece.
- Steady second quarter; disbursements growth for individual loans remained relatively subdued.
- Cost of funds stabilised; margins likely to remain under pressure due to competition.
- Diversified liability franchise to drive growth.
Edelweiss
- Maintains ‘Buy' and hikes target price to Rs 2,653 from Rs 2,589 a share.
- Individual growth steady; conservative in corporate segment.
- Asset quality rises further due to corporate slippage.
- Amid prevailing systemic risk aversion, growth will consolidate in favour of strong players.
- Slackened competition along with sustained spreads will drive companies' revenue momentum.
Nomura
- Upgrades to ‘Buy' from ‘Neutral' and hikes target price to Rs 2,550 from Rs 2,300 apiece.
- Steady performance; steady net interest income growth.
- Individual book steady; builder book not a big worry.
- Risk-reward incrementally getting favorable.
Morgan Stanley
- Maintains ‘Overweight' with a target price of Rs 2,600 apiece.
- Positives were strong underlying NII growth and individual AUM growth.
- Corporate bad loans increased, largely as expected.
- HDFC used one-off capital gains to strengthen provision coverage.
- Reported loan spread broadly stable.
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