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HDFC
F4Q11: Core Trends In-Line
Quick Comment – HDFC reported F4Q11 PAT of
Rs11.4bn (+23% YoY / +28% QoQ): This compares
with our estimate of Rs10.9bn. The key reason for the
beat was higher than expected capital gains and fee
income. We maintain our EW on the stock given that
valuations (on a core basis) seem full at 17.0x F2012e
earnings and 3.7x BV and we see limited scope for
further re-rating in the near term. Core trends were
broadly in line with expectations this quarter – however,
funding costs are moving up implying that incremental
spreads, especially on the retail loans side, are likely to
remain under pressure.
The key trends from the results include:
Loan book growth was at 19.4% YoY / 7.1% QoQ:
The loan book (including loans sold down to other
entities) grew by 19.4% YoY moderating slightly from
the 22.0% recorded in the previous quarter. Part of the
moderation in YoY loan growth was driven by the fact
that growth was extremely strong in the same quarter
last year (loans expanded by 9.4% QoQ in F4Q10).
In this quarter, the individual loan book expanded by
19.9% YoY / 4.5% QoQ while the non-individual loan
book expanded by 18.4% YoY / 12.6% QoQ (sequential
trends in non-individual segments tend to be seasonally
strong this quarter).
NII grew by 17.1% YoY: Reported loan spreads were
broadly stable at 2.33% for F2011 (2.33% for F9M11,
2.31% for F2010). NII growth adjusted for ZCB
issuances would have been approximately 3-4% points
lower in YoY terms.
Fee income grew by 8% YoY / 56% QoQ: The
sequential strength was partly driven by higher fees
received on the non-individual disbursements this
quarter.
Capital gains contribution was Rs1.34bn vs Rs1.7bn
in QE Dec-10 and Rs0.45bn in QE Mar-10. One of its
equity investments had a buy-back in which it
participated and this accounted for a bulk of the capital
gains this quarter.
Cost to core income was lower QoQ at 5%. This
compares with 8.6% in F3Q11 and 4.5% in F4Q10.
Provisions were slightly higher QoQ. HDFC recorded
provision of Rs250mn versus Rs150mn in F3Q10 and
Rs160mn in F4Q10 reflecting the impact of higher standard
provisioning requirements for loans to developers and teaser
loans.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
HDFC
F4Q11: Core Trends In-Line
Quick Comment – HDFC reported F4Q11 PAT of
Rs11.4bn (+23% YoY / +28% QoQ): This compares
with our estimate of Rs10.9bn. The key reason for the
beat was higher than expected capital gains and fee
income. We maintain our EW on the stock given that
valuations (on a core basis) seem full at 17.0x F2012e
earnings and 3.7x BV and we see limited scope for
further re-rating in the near term. Core trends were
broadly in line with expectations this quarter – however,
funding costs are moving up implying that incremental
spreads, especially on the retail loans side, are likely to
remain under pressure.
The key trends from the results include:
Loan book growth was at 19.4% YoY / 7.1% QoQ:
The loan book (including loans sold down to other
entities) grew by 19.4% YoY moderating slightly from
the 22.0% recorded in the previous quarter. Part of the
moderation in YoY loan growth was driven by the fact
that growth was extremely strong in the same quarter
last year (loans expanded by 9.4% QoQ in F4Q10).
In this quarter, the individual loan book expanded by
19.9% YoY / 4.5% QoQ while the non-individual loan
book expanded by 18.4% YoY / 12.6% QoQ (sequential
trends in non-individual segments tend to be seasonally
strong this quarter).
NII grew by 17.1% YoY: Reported loan spreads were
broadly stable at 2.33% for F2011 (2.33% for F9M11,
2.31% for F2010). NII growth adjusted for ZCB
issuances would have been approximately 3-4% points
lower in YoY terms.
Fee income grew by 8% YoY / 56% QoQ: The
sequential strength was partly driven by higher fees
received on the non-individual disbursements this
quarter.
Capital gains contribution was Rs1.34bn vs Rs1.7bn
in QE Dec-10 and Rs0.45bn in QE Mar-10. One of its
equity investments had a buy-back in which it
participated and this accounted for a bulk of the capital
gains this quarter.
Cost to core income was lower QoQ at 5%. This
compares with 8.6% in F3Q11 and 4.5% in F4Q10.
Provisions were slightly higher QoQ. HDFC recorded
provision of Rs250mn versus Rs150mn in F3Q10 and
Rs160mn in F4Q10 reflecting the impact of higher standard
provisioning requirements for loans to developers and teaser
loans.
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