MOSL: HDFC (Buy)-AUM growth, loan yields under pressure led by non-retail AUM
HDFC: AUM growth, loan yields under pressure led by non-retail AUM
(HDFC IN, Mkt Cap USD53.2b, CMP INR2181, TP INR2600, 19% Upside, Buy)
** Core PPoP rose 5% YoY to INR29b in 2QFY20. However, led by higher dividend income from subsidiaries and associates (INR10.8b v/s INR58m in 2QFY19) and a low tax rate (13%), PAT grew 60% YoY to INR39.6b. Excluding the lumpy stake sale and dividend income, our calculations suggest core PBT was flat YoY in 2Q and up ~6% YoY in 1HFY20.
** AUM was up 3% QoQ/13% YoY at INR4.9t and continued to be driven by individual loans (+4%QoQ/17% YoY to INR3.7t). On the other hand, corporate segment AUM was flat QoQ (+4% YoY) with management looking to selectively grow this portfolio. Share of retail AUM was up 60bp QoQ/230bp YoY at 75.6%.
** Core NII on loans increased 12% YoY to INR29.5b, in line with loan book growth. The continued rise in the share of the retail portfolio, hyper-competitive activity in the retail segment, and significant liquidity on the balance sheet are impacting overall NII growth. We expect yields and margin to come under pressure in 2HFY20.
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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