HDFC reported a 2% fall in its quarterly profit at Rs 3,001 crore on lower dividend and investment incomes but the earnings still beat analysts’ estimates.
CLSA, Nomura, Motilal Oswal, Kotak Institutional Equities and Edelweiss have maintained buy recommendations.
“We retain our earnings estimates and expect HDFC to deliver 14-15% core PPOP (Pre-Provision Operating Profit) growth vs less than 10% core PPOP/share growth over FY15-20 as growth outlook for the core business remains strong. Valuations have corrected from 3 times one-year forward price-to-book to 2 times,” said CLSA, retaining a target price of Rs 3,000.
Kotak Institutional Equities said HDFC has reported a strong performance with a stable net interest margin and a marginal rise in stressed loans despite a challenging business environment.
“HDFC remains the best mortgage play in India. A combination of improving real estate cycle, strong debt market position, large provisioning buffers on balance sheet and favourable valuations makes it our favourite pick in the sector,” said Kotak Institutional.
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