Should you invest in HDFC shares after Q1 financial performance?

HDFC shares will be in focus this week after the company’s June 2022 quarterly earnings. HDFC posted double-digit growth in its lows, while asset quality improved significantly. The company has also recorded the highest percentage growth in personal loans based on AUM in the last eight years. Also, the company saw the highest ever disbursements in the first quarter of the financial year. However, the interest rate hike actions after the repo rate hike affected the borrowing cost to a certain level. Its overall borrowing book was stable, while assets under management grew substantially.

In Q1FY23, the NBFC giant reported a consolidated net profit of ₹3,669 crore as against ₹3,001 crore in the same quarter last year, representing a growth of 22%. As of June 30, 2022, the company’s assets under management stood at ₹6,71,364 crore as against ₹5,74,136 crore in the previous year.

During the quarter, HDFC’s personal loan disbursement grew by 66% over the corresponding quarter of the previous year. The disbursements during the quarter are the highest ever disbursements for the Corporation in the first quarter of any financial year. Also, 92% of new loan applications were received through digital channels. The average size of personal loans stood at Rs 35.7 lakh in the first quarter of FY12, as against Rs 33.1 lakh in FY12.

As of June 30, 2022, HDFC personal loans comprise 79% of the AUM. On AUM basis, the growth in personal loan book was 19%. This shows the highest percentage increase in personal loan AUM in 8 years.

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HDFC said, “Home loan demand and the pipeline of loan applications remain strong. Growth in home loans was witnessed in both the middle-income group as well as high-end properties.”

HDFC proposes to raise an international social debt of $1.1 billion – India’s first international social debt and one of the largest globally.

The company has also entered into a share purchase agreement with SBI for acquisition of 97,500 equity shares of HVCL, representing 19.50% of its paid-up equity capital, at ₹10 per share.

Should you invest in HDFC shares after the first quarter of FY 2013?

After the hike in the repo rate, HDFC has increased its deposit as well as lending rates, said Kunal Shah, Renish Bhuva and Chintan Shah, research analysts at ICICI Securities. However, in Q1FY23, interest rate actions, without simultaneous transmission on the asset side, had an immediate impact on borrowing costs, resulting in a 10bps QoQ decline in margins, and NII growth at 8% YoY (down 3% QoQ). till it slowed down. , Adjusted for transmission and higher base in Q1FY22, NII growth would have been 16% in line with AUM growth.

In addition, analysts explained that HDFC has increased its benchmark lending rates by 90 bps in line with the hike in the repo rate, and increased monthly reset for new housing loans from a quarterly reset for personal loans, thereby reducing transmission. will improve. As a result, NII growth is likely to moderate in the coming quarters. Also, the company has G-secs of ₹360 billion and average liquidity of ₹400 billion which was 71% in average LCR. Overall, the management expects the NIM to remain close to ~3.5%.

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Nonetheless, analysts said, “With quarterly reset of back-book loans and monthly reset of incremental loans, we expect NIM as well as NII growth to resume. Moroso, personal portfolio growth of 19% (17%/16%). Q4 /Q3 /Q2/Q1FY22 continued to grow at 16%/13.6% and overall AUM growth at 16% year-on-year. With overall improvement in asset quality metrics (individual and corporate In the books Phase-2 & 3), the credit cost was contained at 33bps (better than) Maintain BUY with SOTP target price of Rs 3,205 (assigning 3x multiple to Core Mortgage Book).

On BSE, HDFC shares were up ₹43.10 or 1.85% at ₹2,379.10. The market valuation of the company is approximately ₹ 4,31,679.65 crore.

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