HDFC stock rises 3% as brokerages raise target price of post Q3 results

Updated : January 28, 2020 01:09 PM IST

Brokerages gave a thumbs up to housing finance giant, HDFC after its quarterly profit beat analysts’ estimates, surging almost 300 percent.

Global brokerage firms Jefferies and Credit Suisse raised the target price for the stock after robust results.

HDFC posted a near four-time jump in profit at Rs 8,372.49 crore for the quarter ended December 31.

Brokerages gave a thumbs up to housing finance giant, HDFC after its quarterly profit beat analysts’ estimates, surging almost 300 percent. The rise in profit was boosted by a one-time fair value gain of Rs 9,020 crore resulting from the merger of its arm, Gruh Finance, with Bandhan Bank.

The company posted a near four-time jump in profit at Rs 8,372.49 crore for the quarter ended December 31. Its profit stood at Rs 2,113.80 crore in the same quarter last year.

Post the results and on bullish calls by brokerages, the firm rose 3 percent in intra-day deals on Tuesday to Rs 2,470.85 per share on the BSE.

Global brokerage firms Jefferies and Credit Suisse raised the target price for the stock after robust results.

Jefferies had a 'buy' rating on the stock and raised its target to Rs 2,745 from Rs 2,510 earlier. It added that HDFC largely maintained the brokerage's loan growth and margin estimate for FY21/22.

"HDFC's bottom line was boosted by fair value investment gain from Gruh stake sale, but core performance was soft. While loan growth was muted in non-retail, retail loans did better. NIMs [net interest margins] also remained stable. Owing to HDFC's better underwriting skills, strong distribution and cost of funds advantage, it is better placed in a tough macro," the brokerage said in its report.

Meanwhile, Credit Suisse maintained an 'outperform' rating on the stock and raised its target to Rs 2,650 from Rs 2,610 earlier. It further noted that operating performance was stable, and the company continued to build a large cushion on provisions. The brokerage also increased the scrip's FY20E EPS By 54 percent factoring in the revaluation gains.

In Q3, the NBFC's AUM (assets under management) growth was the best in three quarters at 14.6 percent compared annually and 3.1 percent compared quarterly. The AUM growth has been led by individual loan growth at 16.4 percent compared to the same period a year ago.

Asset quality, however, continued to deteriorate for the last few quarters and came in at Rs 6,996 crore due to the non-individual portfolio.

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