Consistent growth with limited or no asset quality risks: HDFC has been
delivering 20% plus PAT growth consistently. Coupled with this, HDFC has
excellent track record in maintaining robust asset quality.
High ROEs to sustain; mortgage valuation extremely reasonable: Though
reported ROEs are at 21-22%, ROEs adjusted for subsidiary investments
and also interest on zero coupon bonds is +24-25% which we expect will
sustain. We envisage no regulatory or asset quality risks for the bank, plus
the large de-rating on the stock relating to technical factors (secondary
sale by strategic investors). We believe mortgage business valuations is
extremely reasonable at <3 .0x=".0x" 1-yr="1-yr" book.="book." fwd="fwd" p="p">IFRS accounting to address accounting concerns if any: ZCB issuance has
been in line with investments in subsidiaries (not consolidated) and we see
limited impact from reserve accounting for ZCB interests. Moreover, HDFC
is moving to IFRS accounting from Q2FY13 and that would address investor
concerns, if any. Consolidated ROEs remain at ~22-23% even after
factoring in ZCB interests.
No comments:
Post a Comment