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For 2QFY2012, HDFC’s standalone net profit grew by healthy 20.2% yoy (up
14.9% qoq). Asset quality continued to be stable, although spreads for 1HFY2012
witnessed a marginal decline. We recommend Neutral on the stock.
Another consistent quarter: For 2QFY2012, HDFC’s loan book grew by healthy
19.5% yoy and 2.3% qoq to `126,992cr. Approvals in 2QFY2012 stood at
`24,426cr (up 18% yoy), while disbursements stood at `20,825cr (up 19.0% yoy).
HDFC’s asset quality continued to be stable during 2QFY2012, with gross NPA
ratio falling by 4bp yoy to 0.82%. During 2QFY2012, an amount of `255cr was
utilized from the additional reserve to meet the additional provisions consequent
to changes in provisioning norms mainly on standard assets (0.4% standard
provisioning required on housing loans as well). The spread on loans over the
cost of borrowings stood at 2.29% for 1HFY2012 compared to 2.34% for
1HFY2011. Other income increased by 35.1% yoy (up 2.1% qoq) to `315cr,
driven by a 175.3% yoy increase in dividend income (`63cr) and a 47.4% yoy
increase in profits on sale of investments (`87cr).
Outlook and valuation: At the CMP, HDFC’s core business (after adjusting
`225/share towards value of the subsidiaries) is trading at 4.2x FY2013E ABV of
`106.9 (including subsidiaries, the stock is also trading at 4.2x FY2013E ABV of
`159.0). We expect HDFC to post a healthy PAT CAGR of 15.9% over
FY2011–13E. However, considering that the stock is currently trading at 4.6x
one-year forward P/ABV (the same as its median of 4.6x over the last five years)
and at a 61.7% premium to the Sensex in P/E terms (compared to an average of
37.7% over the last five years), we consider the stock to be fully valued at its CMP
and, hence, recommend Neutral on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
For 2QFY2012, HDFC’s standalone net profit grew by healthy 20.2% yoy (up
14.9% qoq). Asset quality continued to be stable, although spreads for 1HFY2012
witnessed a marginal decline. We recommend Neutral on the stock.
Another consistent quarter: For 2QFY2012, HDFC’s loan book grew by healthy
19.5% yoy and 2.3% qoq to `126,992cr. Approvals in 2QFY2012 stood at
`24,426cr (up 18% yoy), while disbursements stood at `20,825cr (up 19.0% yoy).
HDFC’s asset quality continued to be stable during 2QFY2012, with gross NPA
ratio falling by 4bp yoy to 0.82%. During 2QFY2012, an amount of `255cr was
utilized from the additional reserve to meet the additional provisions consequent
to changes in provisioning norms mainly on standard assets (0.4% standard
provisioning required on housing loans as well). The spread on loans over the
cost of borrowings stood at 2.29% for 1HFY2012 compared to 2.34% for
1HFY2011. Other income increased by 35.1% yoy (up 2.1% qoq) to `315cr,
driven by a 175.3% yoy increase in dividend income (`63cr) and a 47.4% yoy
increase in profits on sale of investments (`87cr).
Outlook and valuation: At the CMP, HDFC’s core business (after adjusting
`225/share towards value of the subsidiaries) is trading at 4.2x FY2013E ABV of
`106.9 (including subsidiaries, the stock is also trading at 4.2x FY2013E ABV of
`159.0). We expect HDFC to post a healthy PAT CAGR of 15.9% over
FY2011–13E. However, considering that the stock is currently trading at 4.6x
one-year forward P/ABV (the same as its median of 4.6x over the last five years)
and at a 61.7% premium to the Sensex in P/E terms (compared to an average of
37.7% over the last five years), we consider the stock to be fully valued at its CMP
and, hence, recommend Neutral on the stock.
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