MOSL: HDFC (Buy)-A stable quarter-continued pick-up in non-retail loans
​HDFC: A stable quarter; continued pick-up in non-retail loans
(HDFC IN, Mkt Cap USD38.7b, CMP INR1564, TP INR1797, 15% Upside, Buy)
- HDFC's 4QFY17 core PBT growth of 12% YoY was in line with estimate. Reported PAT exceeded our estimate by 3%, driven by marginally lower taxes. Continued pick-up in corporate loan growth (+5% QoQ, +16% YoY) helped the company to report healthy core income growth (+13% YoY; 2% beat). Asset quality was stable QoQ, with GNPA % at ~0.8%. Individual disbursement growth of ~2%/10% YoY for 4QFY17/FY17 was a disappointment.
- AUM increased 15.6% YoY to INR3.38t. Retail loan growth was 15.5% YoY, a shade below the trend of 17-18% YoY growth witnessed in past 10 quarters. Corporate loans grew 16% YoY (+5% QoQ). We are encouraged by sustained pick-up in corporate loan growth (led by LRD) over past three quarters. Share of corporate loans in overall AUM increased 30bp QoQ to 27.3%.
- For FY17, core PBT (excl. extraordinary and non-core income) increased 12.5% YoY to INR90b. Core RoA/RoE was 1.9%/19% for the full year. Spreads improved 4bp YoY to 2.33%.
Housing Development Finance is principally engaged in the provision of housing finance, consultancy and leasing services. Co. is also engaged in lending operations, retail deposit taking, and consumer financing. Through its subsidiaries, Co. is engaged in life insurance, non-life insurance, investment advisory services, trust services, investment holding, real estate development, property related services in rural areas and residential housing finance. As of Mar 31 2014, Co.'s distribution network spans 354 outlets which caters towns and cities across India.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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