Angel Broking has maintained neutral rating on Housing Development Finance Corporation (HDFC), in its October 18, 2011 research report.
“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.”
“For 2QFY2012, HDFC’s loan book grew by healthy 19.5% yoy and 2.3% qoq to Rs 126,992cr. Approvals in 2QFY2012 stood at Rs 24,426cr (up 18% yoy), while disbursements stood at Rs 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 Rs 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 Rs 315cr, driven by a 175.3% yoy increase in dividend income (Rs 63cr) and a 47.4% yoy increase in profits on sale of investments (Rs 87cr).”
“At the CMP, HDFC’s core business (after adjusting Rs 225/share towards value of the subsidiaries) is trading at 4.2x FY2013E ABV of Rs 106.9 (including subsidiaries, the stock is also trading at 4.2x FY2013E ABV of Rs 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,” says Angel Broking research report.
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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.”
“For 2QFY2012, HDFC’s loan book grew by healthy 19.5% yoy and 2.3% qoq to Rs 126,992cr. Approvals in 2QFY2012 stood at Rs 24,426cr (up 18% yoy), while disbursements stood at Rs 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 Rs 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 Rs 315cr, driven by a 175.3% yoy increase in dividend income (Rs 63cr) and a 47.4% yoy increase in profits on sale of investments (Rs 87cr).”
“At the CMP, HDFC’s core business (after adjusting Rs 225/share towards value of the subsidiaries) is trading at 4.2x FY2013E ABV of Rs 106.9 (including subsidiaries, the stock is also trading at 4.2x FY2013E ABV of Rs 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,” says Angel Broking research report.
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