Views on HDFC Ltd 2QFY2016 Results: Angel Broking

Views of Mr. Vaibhav Agrawal (VP Research - Banking, Angel Broking) on HDFC Ltd 2QFY2016 Results:

"HDFC reported in-line standalone earnings performance for the quarter. PBT level earnings, adjusted for dividends and sale of investments, for the company grew at 4.3%, which was slightly below expectations. Individual loan book growth was 23% yoy (after adding back the loans sold in the preceding 12 months) whereas the corresponding reported loan book growth was 14.0% which was lower than expected. This was likely due to greater amount of loans sold to HDFC bank in recent quarters. Asset quality was stable with Gross NPA at 0.71%. NII for the company grew at 6.2% yoy due to lower than expected loan growth. Non-interest income for the company came in at INR 486.6cr as compared to INR 242.2cr in 2QFY2015. The increase is attributed to the dividend income from HDFC Bank, which in FY 2015 was received in first quarter, whereas in FY 2016, it has been received in this quarter. Operating income and pre-provisioning profit grew at 16.7% and 17.8% yoy, respectively. Provisioning expenses came in at INR 52 cr, marginally higher than INR 50 crs for 1QFY2016. Overall, the company reported standalone earnings growth of 18.2% yoy.

HDFC continues to post good set of numbers despite sluggish economic environment. Overall, we expect HDFC to post a healthy PAT CAGR of 15.3% over FY2015-17E. The stock has surged significantly from the lows witnessed in the month of August 2015 and currently, HDFC's core business (after adjusting INR 482/share towards the value of its subsidiaries) trades at 4.5x FY2017E ABV, which in our view, offers limited scope for upside here on. Hence, we maintain our Neutral rating on the stock."

Shares of HOUSING DEVELOPMENT FINANCE CORP.LTD. was last trading in BSE at Rs.1312.85 as compared to the previous close of Rs. 1340.85. The total number of shares traded during the day was 218474 in over 8431 trades.

The stock hit an intraday high of Rs. 1350 and intraday low of 1305.9. The net turnover during the day was Rs. 290593132.

Source : Equity Bulls

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