Please refer to important disclosures at the end of this report
HDFC Ltd is specialised housing finance company (HFC) and also the largest
with an outstanding loan book of `312978cr as on Q1FY18 of which individual
loans accounted for ~69% while the corporate proportion has declined to ~30%
from highs of 36% in FY12 led by strong individual home loan growth. In the
past four years, the major driver has been the individual loan book, which grew
at 19% CAGR vs. 11% seen in the corporate book. This is owing to a strained
economic environment leading to a weak investment cycle. It has maintained its
leading position despite a challenging macro environment. This is owing to its
unique strengths such as a strong franchise, brand pedigree, in-house model,
large network and a dedicated business. Factoring the RERA benefit, we believe
the corporate loans segment may see an uptick. HDFC has maintain a healthy
track record of sustaining spreads & NIMs above 2% and 3.5%, respectively,
across volatile interest rate cycles. Further, it earns ~1.2% spread on loans sold
to banks. HDFC has one of the best asset quality parameters in the industry with
Nil NNPA. Its GNPA as on Q1FY18 was 1.12% though marginally surged but
adequately provided. Capital Adequacy Ratio is also maintain >14.5% over last
few years.Provision coverage ratio maintained at 100%. Credit cost at 0.08% is
lowest in the industry.Return ratios have remained healthy across economic
cycles with RoE >20% & RoA ~2.2-2.3% and has been maintaining a healthy
dividend payout of 26.35%.. Hence Buy.
CMP `1755
Reuters Code
BSE Sensex
Face Value (`)
Housing Finance
Market Cap (` cr)
52 Week High / Low
Avg. Daily Volume
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Others | Housing Finance
Oct 13, 2017
HDFC Ltd |Housing Finance
Oct 13, 2017
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement HDFC
1. Financial interest of research analyst or Angel or his Associate or his relative No
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Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)