MOSL: HDFC (Buy)-Uptick in retail lending encouraging
​HDFC: Uptick in retail lending encouraging
(HDFC IN, Mkt Cap USD39.9b, CMP INR1706, TP INR2000, 17% Upside, Buy)
- HDFC reported strong numbers overall. While there was a 5% miss on core PBT, a QoQ rise in the share of individual AUM was a positive surprise. Individual loans grew 4% QoQ and 16% YoY, driven by 23% disbursement growth in individual loans. This is the second quarter of 20%+ growth in individual lending, which is very commendable.
- Corporate loan growth remains robust. The book grew 24% YoY and now accounts for 28% of the overall loan book. Overall AUM growth was a commendable 18% YoY.
- While overall spreads have remained steady at 2.3%, non-individual spreads declined 10bp QoQ to 3.07%. We are positively surprised by the rise in individual spreads by 4bp to 1.94%. This lends credence to HDFC's superior execution in treasury management. NIM shrunk 10bp QoQ to 3.9%, partially driven by dividend payout during the quarter.
- HDFC continues to surprise on the opex front (+10% YoY). Note that opex growth in the past nine quarters has always been sub-13% (average growth of 8% YoY). As a result, despite being one of the lowest expense ratio HFCs, HDFC continues to lower it further. C/I for the quarter was down 20bp YoY at 7%.
- While asset quality was largely stable, there was one INR1.6b corporate account that slipped into NPL in the quarter. GNPL ratio stood at 1.14%.
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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