8 May 2021
4QFY21 Results Update | Sector: Financials
Estimate change
TP change
Rating change
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
HDFC IN
1,721
4503.1 / 61.3
2895 / 1486
1/-1/-10
10881
CMP: INR 2,496
TP: INR3,275 (+31%)
Strong operating performance across parameters
HDFC
Buy
Financials & Valuations (INR b)
Y/E March
Core PPoP
Adj. PAT
Adj. EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
ABV/Sh. (INR)
Core RoA (%)
Core RoE (%)
Payout (%)
Valuation
AP/E (x)
P/BV (x)
AP/ABV (x)
Div. Yield (%)
2021
146.5
106.9
54.5
10.8
609.3
475.9
1.9
12.7
40.0
24.1
4.1
2.8
0.9
2022E
167.4
126.6
63.1
15.8
653.6
520.2
1.9
12.7
44.1
18.1
3.8
2.2
1.1
2023E
191.8
146.1
72.7
15.3
704.7
571.3
1.9
13.3
44.1
12.8
3.5
1.6
1.3
Shareholding pattern (%)
As On
Mar-21 Dec-20
Promoter
0.0
0.0
DII
16.3
17.3
FII
72.8
72.0
Others
10.9
10.7
FII Includes depository receipts
Mar-20
0.0
18.0
70.9
11.1
HDFC’s core PBT grew 19% YoY to INR33.4b (estimate of INR34.2b) of). NII
(ex-assignment income) at INR40.3b was 4% above our estimate. On the
other hand, provisions at INR7.2b were much higher than our est. of
INR3.8b. Better-than-expected MTM gains on investment led to a 12% beat
on reported PAT (+9 QoQ /42% YoY).
For FY21, core PBT / core operating profit grew a healthy 15%/17% YoY to
INR126b/INR146b, despite an additional ESOP charge of INR3.4b.
Strong disbursement growth (on a low base) of 60% YoY, stable QoQ
spreads at 2.3%, GNPA at 1.98%, and a reduction of 74bp QoQ in stage 2
assets were the key positives for the quarter
We largely maintain our estimates. We expect HDFC to report core RoA/RoE
of 2%/13% over FY22–23E. Reiterate
Buy,
with SOTP-based TP of INR3,275
(FY23 SOTP-based).
Robust disbursement performance; loan mix largely stable
The recovery in disbursements was much stronger than expected at the
start of FY21. During the fiscal, HDFC reported 3% YoY growth in individual
disbursements, with 4Q/2H coming in at 60%/42% YoY. Overall individual
AUM grew 5% QoQ / 12% YoY to INR4.4t.
The share of individual loans was
up ~120bp QoQ to 77% (the highest ever).
Non-Individual segment AUM declined ~2% QoQ and grew just 4% YoY.
Growth in this segment was partially impacted by pre-payments (INR94b) in
LRD due to the listing of REITs, leading to a run-off of AUM. An uncertain
environment also led to higher risk aversion. Overall AUM grew +3% QoQ /
10% YoY to INR5.7t.
The company assigned loans worth INR75b during the quarter v/s INR55b
YoY. The corresponding assignment income stood at INR4.3b (v/s INR4.1b
QoQ and INR2.4b YoY).
GNPLs at 1.98% | stage 2 loans up YoY | restructuring at 80bp of AUM
The overall GNPL ratio increased 7bp YoY to 1.98%. However, the corporate
book witnessed a 42bp increase in the GNPL ratio to 4.77%.
Stage 2 loans decreased 74bp QoQ to 6.3% due to some downgrades and
resolutions in the accounts. On a YoY basis stage 2 is up 84bp due to 1)
select stage 1 accounts opting for ECLGS and 2) the classification of all
restructured accounts as stage 2 loans.
During the quarter, the company restructured loans worth INR44.8b (80bp
of AUM). ~73% of these loans are from the Non-Individual segment, of
which one account forms ~50bp of AUM.
The company continues to maintain elevated provisions.
The total buffer
stands at ~2.6% of loans – the highest in our HFC Coverage Universe.
In Mar’21, for the Individual Lending business, collection efficiency (CE)
stood at 98.0% on an overall basis (97.6% in Dec’20) – similar to pre-COVID
levels.
Research Analyst: Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com)
| Piran Engineer
(Piran.Engineer@MotilalOswal.com)
Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com) |
Divya Maheshwari
(Divya.Maheshwari@motilaloswal.com)
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
14 January 2020
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