Geojit BNP Paribas
HDFC (Buy)
CMP: ₹1,222.15
Target: ₹1,400
HDFC is a leading provider of Housing Finance in India with a network of 285 offices catering to over 2,400 towns and cities spread across the country.
Key takeaways: a) HDFC has consistently maintained healthy performance and low delinquencies over past couple of years despite slowdown in the economy.
b) Loan growth was healthy at 15.7 per cent y-o-y in H1FY17 on the back of strong business performance in the individual loan segment (up 18 per cent y-o-y).
c) Asset quality remained stable as Gross NPA increased only 1 bps sequentially to 0.8 per cent in H1FY17.
d) We expect adjusted net profit (excluding one-off income) to increase at a CAGR of 14.2 per cent over FY16-18E backed by healthy NII growth (up 12.2 per cent CAGR).
e) While the pace of loan growth will moderate in H2FY17, the long-term growth prospects of HDFC remains intact given its leadership position.
f) HDFC is the best placed in the housing finance space given its competitive edge over its peers through strong business growth, stable margin and well-managed asset quality.