Views on Housing Development Finance Corp Ltd 1QFY2017 Results: Angel Broking

Views of Mr. Siddharth Purohit (Sr. Equity Research Analyst- Banking, Angel Broking) on Housing Development Finance Corp Ltd 1QFY2017 Results:

"HDFC Ltd reported marginal pick up in the business growth during the quarter with 14.9% growth in AUM. While this looks better than the growth witnessed in 4QFY16, it still remains sluggish, partly due to sell down of loans. Higher sell down of assets and competitive pressure seems to have put some pressure on NIM during the quarter where in the NIM was down 10 bps QoQ to 3.8%. During the quarter HDFC booked gains of INR 725 cr on its sell of 22.9% stake in General Insurance business and hence the reported PAT looks higher at INR 1871 cr. However, adjusting for the onetime gain and INR 275 cr worth of additional provisions the reported were more or less in line with expectations.

Asset quality saw marginal weakening as seen from the GNPAs % which saw 5 bps increase going up to 0.75% vs 0.70% QoQ. While growth seems will pick up in the medium term, excluding the values of JVs, Holding companies and subsidiaries the core business of the corporation is trading at 3x its FY18E BV and seems fairly valued. The stock return going ahead could be in sync with business growth. Looking at the rich valuations we believe in the near term the stock might remain range bound. However, investors with a long-term horizon can hold on to the stock. We have a NEUTRAL rating on the stock."

Shares of HOUSING DEVELOPMENT FINANCE CORP.LTD. was last trading in BSE at Rs.1374.35 as compared to the previous close of Rs. 1401.25. The total number of shares traded during the day was 150938 in over 5008 trades.

The stock hit an intraday high of Rs. 1406.95 and intraday low of 1373.05. The net turnover during the day was Rs. 208419428.

Source : Equity Bulls

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