Housing Development Finance Corporation (HDFC) on Monday announced its Q2 earnings with standalone net profit surging 60.5 percent year-on-year (YoY) to Rs 3,961.53 crore.
Net interest income (NII) rose 16.2 percent to Rs 3,077.7 crore in the September quarter compared with Rs 2,594 crore a year ago, while gross non-performing assets (NPAs) rose marginally to 1.33 percent from 1.29 percent in the June quarter.
Following HDFC's Q2 earnings, Jefferies in a research report has said that the financier's bottom line was boosted by GRUH stake sale, but the core performance was soft.
"HDFC went slow on the corporate/developer loans given the unfavourable lending environment, tighter liquidity conditions, over-leveraged and corporate debt rating downgrades leading to heightened risks across the developer/construction finance segment," said Jefferies.
The brokerage further added that non interest income grew 12.1 percent YoY owing to moderating loan growth and stable NIM as well as due to one-time gains with respect to profits from stake sale in GRUH Finance.
However, Jefferies maintained the credit cost estimate for FY20 but warned of a negative surprise coming off from elevated stress in a few corporate assets.
The brokerage increased the EPS estimate by 5-9 percent for FY20-22, forecast assets under management (AUM) CAGR (compound annual growth rate) of 13.4 percent and BVPS (book value per share) CAGR of 7.4 percent over FY19-22E.
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