HDFC Stock Strategy: Housing finance company HDFC Ltd is witnessing a strong boom after the March quarter results. HDFC shares have risen by 2.5 percent to Rs 2554 today. It closed at Rs 2497 on Friday. Overall, the housing finance company’s quarterly results have been better, which strengthened the sentiment of investors. While the company’s profit has increased, asset quality is also getting better than before. Clarity has arrived at management level. The company’s assets have been growing in both under management and loan books. Currently, after the results, many brokerage houses have given positive opinion about investing in the stock.
Strong recovery in disbursement
HDFC’s disbursement has seen strong recovery. In the fourth quarter of FY 2021, disbursement growth was 60 per cent on an annual basis and 42 per cent in the second quarter. Overall indirect AUM grew by 12 per cent on an annual basis and 5 per cent on a quarterly basis. The share of indebtedness has increased by 120 bp to 77 per cent on a quarterly basis, which is the highest ever. HDFC Limited’s Asset Under Management (AUM) has grown to 5.70 lakh crore in the fourth quarter.
Loan book boom, asset quality improved
There has been a 12 per cent increase in Indivisual Loan Book and 4 per cent in Non-Indivisional Loan Book during this period. The company has given a loan of 7500 crores in the fourth quarter. Whereas in the same quarter a year ago, it was 5500 crores.
HDFC’s gross NPA stood at Rs 9759 crore at the end of the fourth quarter, which is 1.98 per cent of the total loan portfolio. The NPA stood at 0.99 per cent for the Indivisual Portfolio and 4.77 per cent for the Non-Indivisual Portfolio.
NII increased by 14%
HDFC Limited’s net interest income (NII) increased 14 per cent year-on-year in the March quarter. NII of the company during this period has been 4065 crores. Net interest margin reached 3.5 percent by the end of this year. In the March quarter, HDFC Limited’s profit grew 42 per cent year-on-year to Rs 3180 crore. The company has also announced a dividend of Rs 23 per share for the financial year 2021.
What is the opinion of the brokerage house
Brokerage house Motilal Oswal has kept the target of the stock at Rs 3275 while recommending investment in HDFC Limited. If you look at Friday’s closing price of Rs 2497, it can get a return of close to 30 per cent. Brokerage house Sharekhan has set a target of Rs 3100, recommending investment in HDFC Limited. HSBC has also advised purchase in HDFC Limited and has set a target of Rs 2900 for the share. Whereas JP Morgan has given overweight rating in the stock and has given a target of Rs 2860. Brokerage house ICICI Dignirect has also given a target of Rs 3100 for the stock, recommending the purchase.
(Note: We have given information here based on the company’s quarterly results and brokerage house report. Considering the risk of the stock market, consult the experts at their level before investing.)