HDFC - Add - Business as usual - IIFL

HDFC reported robust net profit growth of 19% to Rs11.5bn, in line with consensus and our estimate. The strong performance was driven by healthy loan growth, stable margins and good asset quality.

- Retail loan growth has been strong too. HDFC has recorded an uptrend in its growth rate since 2QFY12, allaying concerns of increased competitive intensity affecting its growth prospects.

- NIM and asset quality remained stable through the quarter, driving robust net profit growth. Conversion of warrants into equity capital during the quarter boosted Tier I CAR.

- Growth outlook remains robust, driven by HDFC's strengthening competitive position and expanding reach. Healthy loan growth, stable margins and good asset quality would drive 17.4% EPS Cagr and 22.5% average ROE during FY12-15ii.

- HDFC is our preferred play in the mortgage lending business, driven by its strengthening competitive position and expanding reach. We maintain our recommendation and raise our TP to Rs910.

Source : Equity Bulls

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