HDFC Q2 Review: Strong Growth Outlook To Help Gain Market Share
Analysts expect Housing Development Finance Corporation Ltd. to gain further market share given the strong growth outlook after second-quarter profit beat estimates.
Net profit of India's largest non-bank housing financier rose 18% year-on-year to Rs 4,454 crore, according to its exchange filing. That compares with the Rs 4,277-crore consensus estimates of analysts tracked by Bloomberg.
HDFC Q2FY23 Earnings Key Highlights:
Net interest income rose 13% from a year ago to Rs 4,639 crore.
Assets under management rose 15.5% year-on-year to Rs 6.9 lakh crore, as on Sept. 30. Adjusted for loans sold, the loan book stood at Rs 5.95 lakh crore, up 14.3% year-on-year.
Loans to individuals rose 20% from a year ago to Rs 4.66 lakh crore at the end of the second quarter.
The spread on loans over the cost of borrowings for the half-year was 2.28%. The spread on the individual loan book was 1.91%, and on the non-individual loan book it was 3.65%.
GNPA at 1.59%, down 19 basis points sequentially. Gross NPAs for the individual segment stood at 0.91%, while for the non-individual segment it stood at 4%.
As on Sept. 30, the corporation carried a total provision of Rs 13,146 crore. The provisions carried as a percentage of the Exposure at Default or EAD is equivalent to 2.21%.
Analysts expect the lag in the transmission of rate resets in assets and liabilities to be transitory. Once adjusted, the uptick in interest rates would help expand the bank's core income further and also improve its net interest margins, they said.
At 9:50 a.m., shares of HDFC were down 0.24% while the benchmark Nifty 50 traded flat on the NSE.
Here's what analysts expect from HDFC going forward:
Nomura
With distribution strength likely to increase, remain confident on market share accelerating further.
Net interest margin lag is transitory and should normalise.
Maintain 'buy' rating with a target price of Rs 2,850.
Macquarie Research
Sanctions and disbursements growth was encouraging.
Non-indicvidual loan growth continues to be weak due to prepayments and lower growth in corporate and lease rental agreements.
Strong loan growth and improvement in return on equity are upside catalysts.
Maintain 'outperform' rating with a 12-month price target of Rs 3,060.
Axis Capital
Remain upbeat on growth prospects.
Affordable housing continues to grow and uptick in high-ticket loans is also a positive.
Factor in 14% advances growth in FY23-25.
Maintain 'buy' rating with a target price of Rs 3,025.
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