Q4FY21 Result Update - HDFC Ltd - ICICI Direct

A healthy revival in credit offtake, especially individual segment thereby leading to improvement in operational performance remained a key highlight of the quarter. Asset quality remained broadly resilient. For Q4FY21, the company posted a healthy operational performance with NII growth of 10% YoY to Rs. 3918 crore, driven by margin expansion and healthy AUM growth. Reported NIM was at 3.5%, up ~10 bps QoQ, YoY. Expansion in NIMs was aided by 8 bps sequential uptick in non-individual spreads. Reducing levels of surplus liquidity also helped in NIM expansion. Other income growth came in at Rs. 1224 crore, up 62% YoY. The sharp rise was partly on account of dividend income. The bank has made provisions worth Rs. 719 crore during the quarter including Covid-19 provisions, taking cumulative Covid related provisions at Rs. 844 crore. PAT for the quarter was at Rs. 3180 crore; higher than our estimates.

Valuation & Outlook

Robust pick up in individual disbursement at 60%, margin expansion of ~10 bps and collection efficiency at 98% reflect healthy revival in individual business which comprises ~74% of gross loan book. We remain positive on earnings visibility given 1) business growth led by market leadership, 2) adequate capital of 22.2%, 3) funding advantage and 4) healthy provision buffer. Healthy performance in subsidiaries would aid consolidated earnings. Stake sale in HDFC Ergo (to reduce stake as per regulatory regime) could lead to one off inflows. We expect earnings to grow at 14.6% CAGR in FY21-23E with healthy RoA at ~2.2% in FY23E. We maintain our target price at Rs. 3100, valuing core business at 2.5x FY23E ABV and subsidiaries at 15% holding company discount. We maintain BUY.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_HDFCLtd_Q4FY21.pdf

Shares of HOUSING DEVELOPMENT FINANCE CORP.LTD. was last trading in BSE at Rs.2496.25 as compared to the previous close of Rs. 2430.55. The total number of shares traded during the day was 224612 in over 15919 trades.

The stock hit an intraday high of Rs. 2507 and intraday low of 2439. The net turnover during the day was Rs. 555751082.

Source : Equity Bulls

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