Most brokerages bullish on HDFC post Q4 results

Mumbai: Most brokerages have retained bullish stance on India's largest mortgage finance company Housing Development Finance Corporation after a strong fourth quarter performance. Analysts said HDFC is best placed within housing finance space to face the liquidity challenges in the sector due to its strong funding franchise.

Citi, CLSA, IIFL, Prabhudas Lilladher, and Nomura have maintained buy ratings on HDFC. Shares of HDFC ended up 1.1% at Rs 1973.25 on Tuesday.

"We believe HDFC is well-placed to grow given its strong funding franchise and will see a 16% loan Cagr (compounded annual growth rate) over FY19-21 driving earnings growth," said CLSA. It has revised target price higher to Rs 2500 from Rs 2360 due to rolling forward of estimates.

HDFC reported a 27% rise in net profit in the March quarter to Rs 2862 crore. The total loan book of HDFC stood at Rs 4.06 trillion compared to Rs 3.62 trillion in the previous year.

However, Antique has recommended a 'hold' raing on the stock despite a strong fourth quarter performance.

"Although HDFC remains the best placed HFC (housing finance company), it may not be the best idea to assume that HDFC will perpetually gain lot of market share given the continued presence on large banks," said Antique.

The brokerage said some volatility in asset quality cannot be ruled out for HDFC as 27% of its loan book is towards wholesale and developer segment.

Nomura said HDFC's fourth quarter performance was stronger than expected with higher than expected growth in net interest income and stable asset quality.

However, it prefers corporate banks such as ICICI Bank, Axis Bank and State Bank of India over HDFC as it sees multiple re-rating potential in them.