HDFC's asset quality remain stable with gross stage 3 assets stood at 2.28% vs 2.19% QoQ; better than estimated. Also, restructured assets stood at 0.9% of AUM which majorly comprises of one large real estate builder group (0.5% of AUM). PAT declined by 65%YoY; however adjusted for dividend, fair value gain (merger of Gruh with Bandhan bank), net gains on assigned loans, provisioning and employee stock option, PBT grew by 27% YoY.

Collection efficiency for individual loans for December month stood at 97.6% vs 96.3% for September month. Disbursements for individual loan segment grew by 26% YoY reflects housing demand remains robust. December 2020 witnessed the highest ever levels in terms of receipts, approvals and disbursements. Provisions stood at Rs.123.42 billion higher than regulatory requirement (Rs.65.79 billion). It should support asset quality shocks in P&L.

Commenting on the result review, IDBI Capital Markets & Securities said, "We reiterate Accumulate rating with new TP at Rs.2,825 (earlier Rs.2200), valuing parent business at Rs 1,520 (2.9x P/ABV FY23) and rest for the subsidiaries. We believe HDFC should gain the market share as few HFCs are focusing on liability side and slowing down on asset growth. Higher provisions on the balance sheet give the cushion in P&L from any negative impact on non-individual portfolio if real estate sector continue to face issues."  

Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.