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hdfc share price gains 2% on robust q3 show; jefferies maintains buy, raises target

Tuesday, Jan 28 2020 11:05AM

Housing Development Finance Corporation (HDFC) share price added nearly 2 percent in the early trade on January 28 after the company posted better-than-expected numbers for December quarter.

The company reported a 296 percent year-on-year growth in standalone profit at Rs 8,372.5 crore in the October-December period against Rs 2,113.8 crore in the same quarter last year.

Net interest income grew by 9.8 percent year-on-year to Rs 3,296.7 crore.

Asset quality weakened a bit, with gross non-performing assets (NPAs) as a percentage of gross advances rising 3bps QoQ to 1.36 percent. Non-individual gross NPA inched up to 2.91 percent in Q3 from 2.87 percent in Q2.
Total revenue from operations jumped 91.82 percent year-on-year to Rs 20,285.47 crore.

Jefferies has maintained a buy rating and raised the target to Rs 2,745 from Rs 2,510 per share.

The investment gains are partly used to buffer up provision coverage. The loan growth was muted in non-retail, while retail loans did better, said Jefferies.

The company is better placed in a tough macro environment.

The research house largely maintains its loan growth and margin estimates for FY21/22, while FY20 EPS estimates have been raised by 54.3% & FY21-22 by 1-3%.

While maintaining an outperform rating, Credit Suisse raised target to Rs 2,650 from Rs 2,610 per share.

The Q3 results were in-line with estimates. The operating performance was stable, while continues to build a large cushion on provisions, said Credit Suisse.
Asset quality was stable, with overall loan growth picking up and spreads being stable. FY20E EPS was increased by 54%, factoring in the revaluation gains, it added.

At 0929 hours, Housing Development Finance Corporation was quoting at Rs 2,439.35, up Rs 43.55, or 1.82 percent, on the BSE.

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