HDFC - Q2FY14 Result Review - Angel Broking

HDFC reported in-line standalone earnings performance for the quarter. Earnings at the PBT level, adjusted for dividends and sale of investments, for the company grew at healthy pace of 16.2% to Rs. 1,464cr, in-line with expectations. Healthy loan book growth (19.2% yoy) and stability witnessed on the asset quality front (nearly flat Gross NPA ratio, on a sequential basis) were the key highlights from the results.

Net Interest Income for the company grew at 11.0% yoy to Rs. 1,814cr, in line with expectations. Non-interest income for the company came in at Rs. 95cr as compared to Rs. 102 in 2QFY2013. Operating income and pre-provisioning profit grew at 9.9% and 9.3% yoy, respectively. Provisioning expenses for the company came in at Rs. 15cr, lower than Rs. 40cr in 2QFY2013. Overall, the company reported standalone earnings growth of 10.0% yoy to Rs. 1,266cr. Given the challenging macro developments, we believe within the BFSI space, defensive names like HDFC may not underperform the rest of the sector in spite of its rich valuations. At CMP, HDFC's core business (after adjusting Rs. 321/share towards the value of its subsidiaries) is trading at 3.2x FY2015E ABV. We maintain our Neutral rating on the stock.

Source : Equity Bulls

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