Individual loans can drive HDFC shares to Rs 3,000

• Follow

India’s biggest mortgage lender HDFC reported a 31% rise in consolidated net profit at Rs 5,669 crore for the last quarter of the financial year ended March 2021. It had posted a net profit of Rs 4,342 crore in the same quarter of the fiscal year 2019-20.

Total income on the consolidated basis more than doubled to Rs 35,754 crore in the January-March period of 2020-21, as against Rs 16,632 crore in the same period of 2019-20, HDFC said in a regulatory filing.

The interest income during the reported quarter fell to Rs 10,879 crore, from Rs 11,391 crore in the year-ago period.

While announcing its financial results for the March quarter, the country’s biggest mortgage lender said that individual loan disbursements grew by 60% year-on-year. “Growth in home loans was seen in both, the affordable housing segment as well as high-end properties,” HDFC said.

With such strong numbers, analysts are upbeat on the stock here is what they have to say:

CLSA | Target price: Rs 3,000 | Upside: 20%

New home sales are improving after a steady decline during FY14-20F; this should drive core NII/PPOP (Pre-provision operating profit) growth of 15% during FY20-23F vs 8% PPOP  growth during FY15-20. Adjusted for subsidiaries, valuations are reasonable at 11.3 FY23 P/PPOP, which is close to long-term average multiples. While wave-2 Covid-19 risk remains, HDFC carries very high provisioning.

Kotak Institutional Equities | Target price: Rs 3,050 | Upside: 22%

HDFC is best placed to ride the current uncertain environment. It’s defensive (salaried housing loans) portfolio bodes better than its pro-cyclical non-bank peers if the impact of the second Covid wave is higher than expected. In a scenario of quick reversion from the Covid crises, HDFC remains the best play on improving housing demand and dominant market presence in the developer loan segments, especially after the exit of many of its peers.

(Disclaimer: The recommendations in this story are by the respective research and brokerage firm. Money9 & its management do not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)