Brokerages see over 28% upside in HDFC; What should investors do with this stock post Q3 results?

Several Global brokerage firms have retained their ratings on HDFC Ltd post December quarter results after the country's largest mortgage lender reported a standalone net income of Rs 3,261 crore for the three months to December 2021

HDFC Ltd recorded an 11 per cent growth over Rs 2,926 crore in the same quarter of the previous year, on higher loan sales, said a PTI report. Source: HDFC/Twitter

Several Global brokerage firms have retained their ratings on HDFC Ltd post December quarter results after the country's largest mortgage lender reported a standalone net income of Rs 3,261 crore for the three months to December 2021.

HDFC Ltd recorded an 11 per cent growth over Rs 2,926 crore in the same quarter of the previous year, on higher loan sales, said a PTI report.

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On a consolidated basis, the company reported a 13 per cent jump in net income for the period at Rs 5,837 crore on a consolidated income of Rs 31,308 crore, which was down from Rs 39,268 crore on-year and also lower sequentially from Rs 38,604 crore in September 2021 quarter, as the pandemic had affected loan sales.

The most aggressive target price of Rs 3350 on HDFC post December quarter results were put out by Credit Suisse which translates into an upside of over 28 per cent from Rs 2613 recorded on 2 February.

Gross NPAs for individual loans stood at 1.44 per cent while the same for non-individual loans was 5.04 per cent, taking total gross NPAs to Rs 12,419 crore, equivalent to 2.32 per cent of the total portfolio, highlighted the PTI report.

We have collated a list of recommendations from various global brokerage firms according to a Zee Business TV report:

Credit Suisse: Outperform| Target Rs 3350

Credit Suisse maintained an outperform rating on HDFC post December quarter results with a target price of Rs 3350 which translates into an upside of 28 per cent from Rs 2613 recorded on 2 February.

The company has shown steady growth which is a positive sign. It remains a good play on the housing segment, as growth recovery continues, and the credit cost has moderated.

We expect RoEs to improve to >13% in FY23E, said the note. HDFC trades at 1.8x FY24E core P/ B.

CLSA: Outperform| Target Rs 3050

CLSA maintained an outperform rating on HDFC post December quarter results with a target price of Rs 3050 that translates into an upside of nearly 17 per cent from Rs 2613 recorded on 2 February.

The risk-to-reward ratio is better now. The net interest income (NII) growth is likely to lag AUM Growth. The global investment bank slashed the core PPoP estimate by 4-5% due to lower NII.

CLSA expects individual CAGR of 17-18% over FY23-24, but the best of margin improvement is behind us.

Citigroup: Buy| Target Rs 3300

Citi maintained a buy rating on HDFC post December quarter results with a target price of Rs 3300 that translates into an upside of over 26 per cent from Rs 2613 recorded on 2 February.

The December quarter earnings remain strong amid rise in demand. The asset quality has also improved. Both individual and total AUM growth improved which is a positive sign.

The stock is trading at 2.2x core March 23 P/B. The global investment bank tweaked FY22/23 estimates by -2%/+1%.

Morgan Stanley: Overweight| Target Rs 3340

Morgan Stanley maintained overweight rating on HDFC post December quarter results with a target price of Rs 3340 which translates into an upside of over 27 per cent from Rs 2613 recorded on 2 February.

Core PPOP was 6% below estimates and the NII (on computation) was also 7% below estimates. Yes, the asset quality has improved with Stage 2 + 3 loans declining by 80bp QoQ – a positive sign.

Individual AUM growth remained strong at 16% YoY, and 4% QoQ, said the note.

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)

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