MOSL: HDFC (Buy)-Healthy core operating performance
HDFC: Healthy core operating performance
(HDFC IN, Mkt Cap USD44.2b, CMP INR1762, TP INR2140, 21% Upside, Buy)
- HDFC’s PAT increased 25% YoY to INR24.7b (a 9% miss due to prudent provisioning from one-off gains), driven by healthy AUM growth and stable spreads. Total AUM grew 17% YoY (+3% QoQ) to INR4.3t. Individual AUM increased 18% YoY (+3.9% QoQ) to INR3.2t. Corporate AUM growth has moderated from 23% YoY a year ago to 13% YoY now.
- Reported spreads were stable YoY at 2.28% for the quarter, with individual lending spreads at 1.91% and non-individual lending spreads at 3.11%. NIM stood at 3.5% v/s 4.4% a year ago.
- NII grew 21% YoY (3% beat). Under Ind-AS, HDFC has started recognizing assignment-related income upfront from this quarter. This was INR4b for 2QFY19 v/s INR2.26b a year ago. Adjusted for this, NII increased 16% YoY, largely in line with AUM growth of 17%.
- GNPA ratio declined 5bp QoQ to 1.13%, driven by a 14bp QoQ decline in corporate GNPLs to 2.18%. During the quarter, one large corporate account of INR9b was partially recovered with <20% write-off.
- Outstanding provisions on the balance sheet stood at INR50.7b v/s INR32.3b a year ago. HDFC made prudent provisioning of INR2.7b (30% of one-off gains on HDFC AMC stake sale of INR8.9b) in 2QFY19.
- On a YTD basis, HDFC has taken a yield hike of 65-70bp on retail loans and 130-150bp on corporate loans (of which 50-60bp is in 3Q).
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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