Housing finance major HDFC Ltd on Wednesday met street expectations as it reported an 11.4 percent jump in its standalone net profit at ₹3,261 crore for the quarter ending December 31, 2021. The rise in its profit was aided by robust growth in the firm's net interest income (NII) and a fall in tax expenses.
Its standalone net profit stood at ₹2,926 crore in the year-ago period.
The firm's net interest income was up 7 percent in Q3 at ₹4,284 crore as against ₹4,005 crore in the same period last year. Meanwhile, its tax expenses were down to ₹787 crore in Q3 versus ₹890 crore in the year-ago period.
"The demand for home loans and pipeline of loan applications continues to remain strong. Growth in home loans was seen in both, the affordable housing segment as well as in high-end properties. The increasing sales momentum and new project launches augur well for the housing sector," HDFC said in a stock exchange filing.
Here's what brokerages have to say regarding the results:
The brokerage has a 'buy' rating on the stock with a target at ₹3,200 per share. As per the brokerage, the December quarter was an operationally healthy quarter as the disbursement momentum was strong and collections in the Individual segment improved further improvement.
Credit costs were benign at 26 bps and the lowest in the last 12 quarters. Asset quality exhibited deterioration because of reclassification under the RBI NPA circular but should exhibit steady improvement from hereon even as the Non-Individual segment would participate through resolutions/recoveries in the segment, it added.
The brokerage maintains an 'outperform' call on the stock but cut its target to ₹3,050 per share from ₹3,250 earlier. It believes that the best of margin improvement for the firm is behind us. The brokerage stated that while HDFC's risk-reward is better in Q3 as compared to previous quarters, the NII growth is likely to lag the AUM growth. . It also expects individual compound annual growth rate (CAGR) of 17-18 percent over FY23-34.
The brokerage maintains a 'buy' call on the stock with a target at ₹3,190 per share. The brokerage stated that HDFC has consistently outclassed its peers in terms of market share, spreads and asset quality. While HDFC is a key beneficiary of an uptick in residential sales, it expects competitive intensity to remain high. It further added that the firm has managed to maintain its spreads over the years though it is likely to restrict further expansion in valuation multiples despite the acceleration in growth.
The brokerage maintains an 'outperform' rating on the stock with a target at ₹3,340 per share. The brokerage noted that the firm's asset quality improved as well as its individual asset under management growth remained strong at 16 percent on a YoY basis. However, it added that non-individual loan book growth remained muted for the quarter.
The brokerage maintains a 'buy' call on the stock with a target at ₹3,300 per share. The brokerage noted that the firm witnessed strong demand during the quarter as the total assets under management growth improved. It also showcased an improvement in asset quality for the quarter under review.
Despite positive reviews, the stock was trading around 2 percent lower at ₹2,565 per share on BSE at 10:05 am.