After the quarterly results, there is a big decline in today’s trading in the shares of finance sector giant HDFC. However, after the results, the brokerage houses are bullish on the stock and are advising to buy.
HDFC Lts Stock Price Today: After the quarterly results, there is a big decline in today’s trading in the shares of finance sector giant HDFC. Today the stock fell more than 3 percent to a low of Rs 2522. Whereas on Wednesday the stock closed at Rs 2613. In the December quarter, the company’s profit has increased by 11 percent to Rs 3261 crore, which is better than expected. After the results, the brokerage houses are also bullish about the stock and are advising to buy. The brokerage house says that the credit cost of the company has been the lowest in 12 quarters. The asset quality has improved and the company has maintained adequate provisioning buffer. Loan growth is good. The demand momentum is expected to continue going forward. In such a situation, there is a strong expectation of further growth in the stock.
Valuation and View
Brokerage house Motilal Oswal says that the December quarter has been operationally healthy for HDFC. The disburse momentum is strong and there has been an improvement in the collections in the individual segment as well. At the same time, the credit cost has been the lowest in the last 12 quarters. Asset quality has deteriorated due to reclassification under RBI NPA circular. But from here onwards the asset quality is expected to improve continuously even though non-individual segments will participate through resolution/recovery in the resolution. Or you can participate in this segment through recovery.
What is the expected growth in earnings
According to the brokerage, 1.35 per cent of the AUM is less than that of aggregate restructuring piers and hence there is less chance of any negative development in the potential stress pool. With 2.45 per cent overall provisioning of EAD, we can say that HDFC has adequate provisions for any emergency with regard to asset quality. The brokerage house has not made any changes in the earnings estimates. According to the brokerage, the company’s AUM and PAT CAGR during FY22-24E can be 14 percent. During this, RoA / RoE is estimated to be 1.9 percent and 13 percent. While recommending investment in the stock, the brokerage house has given a target of Rs 3200.
Surprising Credit Cast Event
Brokerage house ICICI Securities has also given a target of Rs 3550 while advising investment in the stock. The brokerage house says that the credit cost of HDFC has decreased by 27 bps in the December quarter, which is surprising. Due to which the company has made better profits. The company has already kept the provisioning buffer high, which is positive in terms of asset quality. The company’s NII growth has been 7 percent on a yearly basis. NII growth has been moderate due to high base. According to the report, the individual loan growth momentum has been 16 per cent year-on-year and has grown by 4 per cent on a quarterly basis. In this case the company’s market position has improved. Non in divisive AUM has been flat.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)
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