HDFC Q3 FY12 Results Analysis
HDFC Ltd has reported a growth of 39% in interest income and 10% growth in net profits YoY during the results declared for Q3 FY 2012.
Results Summary
- HDFC reported a 39% YoY growth in Interest income in the first 9 months of FY12 on the back of 21% YoY growth in advances.
- Net Interest Margin (NIM) stands at 4.3% in 9 months of FY12 against 4.4% in the same period last financial year.
- Other income falls by 14% YoY in 9mFY12 mainly due to lower gains booked on sale of investments.
- Net profit grows by 17% YoY for 9mFY12. Profits grew only by 10% YoY during 3QFY12 due to lower other income and higher costs of funds.
- CAR (Capital Adequacy Ratio) stands at a healthy 13.9% at the end of 3QFY12.
- Gross Non-performing assets (NPAs) stand at 0.8% at the end of 3QFY12.
Stock Analysis:
The stock is trading at 3.6 times of estimated FY14 consolidated adjusted book value at the current price of Rs 675. In the current interest rate scenario and on a higher base of individual home loans, growth for HDFC is unlikely to come in at a sharp rate going forward. HDFC was able to maintain its margins at 4.3% in the first 9 months, but can still see some pressure on its net interest income (NII) on higher costs of funds. However, with the RBI expected to cut rates over the next few months, HDFC should soon be able to capitalize on the same.
Though the company is doing good, it is better to stay away from this stock on account of expensive valuations.
