HDFC Limited - Q1 FY22 Result Report - YES Securities

(Rating: BUY, TP: Rs 3,020, Upside: 22.6%)

Best result (most resilient) in housing finance space

- HDFC delivered a resilient performance on both growth and asset quality in the Individual Loans segment (78% of AUM), demonstrating its robust execution engine which is driving calibrated market share gains and a prudent underwriting framework that emits lower stress.

- HDFC has delivered a relatively stronger performance (v/s other HFCs as well as Banks) in individual mortgages segment by registering 2.5% qoq growth and limited increase in Stage-3/PAR 30 portfolio of 40 bps/100 bps. Incremental restructuring too has been marginal (+ 15bps incl. all loans).

- Home loans disbursements in July were third highest ever in a month for the company, suggesting that growth momentum would further accelerate in the near term.

- We believe that company is well-placed to benefit from a widely expected structural housing market recovery due to robust distribution and execution architecture (being bolstered by origination tie-ups), high-quality portfolio of individual loans, well-provided stress in non-individual segment (32% provisioning on PAR 30) and robust capital position (Tier-1 at 21.3%).

- We project core PPOP growth of 13-14% over FY21-24 with stable spreads (competition unlikely to impact in future too). The core mortgage business is available at 1.9x FY23 P/ABV. Maintain BUY and 12m PT of Rs3020.

Shares of Housing Development Finance Corp. Ltd was last trading in BSE at Rs. 2553.95 as compared to the previous close of Rs. 2462.3. The total number of shares traded during the day was 274322 in over 20314 trades.

The stock hit an intraday high of Rs. 2559.9 and intraday low of 2477.4. The net turnover during the day was Rs. 692704069.

Source : Equity Bulls

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