Result Analysis: HDFC Ltd. Result Update Q3FY22
Particulars (In ₹. Cr) Q3FY22 Q2FY22 Q3FY21 QoQ % YoY%
Interest Income 11055.15 10578.96 10710.18 4.50% 3.22%
Dividend Income 195.46 1171.26 2.22 -83.31% 8704.50%
Other Income 541.60 476.16 1003.94 13.74% -46.05%
Total Income 11792.21 12226.38 11716.34 -3.55% 0.65%
Interest Expenses 6873.05 6573.47 6832.65 4.56% 0.59%
Net Interest Income 4284.00 4108.00 4005.00 4.28% 6.97%
NIM 3.6% 3.6% 3.4% 0.00% 5.88%
Employee Benefit expenses 234.48 280.11 290.53 -16.29% -19.29%
Profit Before Tax 4048.18 4671.07 3752.54 -13.34% 7.88%
Profit After Tax 3260.69 3780.50 2925.83 -13.75% 11.44%
PATM (%) 27.65% 30.92% 24.97% -10.57% 10.73%
Basic EPS (in Rs. ) 18.02 20.93 16.27 -13.90% 10.76%
Business Details Q3FY22 Q2FY22 Q3FY21 QoQ % YoY%
Loan 12006.49 12421.48 11891.72 -3.34% 0.97%
Life Insurance 13944.49 20591.53 21676.23 -32.28% -35.67%
General Insurance 4979.12 6095.61 5204.75 -18.32% -4.34%
Asset Management 574.99 589.15 480.68 2.40% -19.62%
Others 200.15 385.82 178.6 48.12% -12.07%

Result Highlight:

  • HDFC Ltd Consolidated Interest Income rose 4.5% QoQ and by 3.22% YoY to ₹ 11055 crore – in line with the estimates. Fee and commission income was flat QoQ to ₹61.44

  • The net interest income (NII) for the half year ended December 31, 2021 stood at ₹ 4284 crore compared to ₹ 4005 crore in the previous year, representing a growth of 6.97%.

  • During the quarter company reported 3.6% NIM.

  • Net profit rose 11.44% YoY to ₹3260.69 crore for the December quarter compared with ₹ 2925.83 crore in the same quarter last

  • 48% growth in individual disbursements for the nine months ended December 31, 2021.

  • As at December 31, 2021, the gross individual NPLs stood at 1.44% of the individual portfolio while the gross non-performing non-individual loans stood at 5.04% of the non-individual portfolio.

  • During the nine months ended December 31, 2021, 30% of home loans approved in volume terms and 13% in value terms have been to customers from the Economically Weaker Section (EWS) and Low Income Group (LIG).

  • The gross NPLs as at December 31, 2021 stood at ₹ 12,419 crore. This is equivalent to 2.32% of the portfolio.

  • The spread on loans over the cost of borrowings for the nine months ended December 31, 2021 was 2.26%. The spread on the individual loan book was 1.93% and on the non-individual book was 3.25%Collection efficiency was at 98%.

  • For the nine months ended December 31, 2021, cost to income ratio stood at 8.1%, the same as compared to the previous year.

  • As at December 31, 2021, loans restructured under the RBI’s Resolution Framework for COVID-19 Related Stress (OTR 1.0 & 2.0) was equivalent to 1.34% of the loan book. Of the loans restructured, 64% are individual loans and 36% are non-individual loans.

  • Provision coverage Ratio stood at 48.9%.

  • Capital adequacy ratio stood at 22.4%.

Management commentary:

  • Management said HDFC recognized additional NPA worth Rs. 2746 crore, before these loans were overdue for more than 90 days, excluding these loans gross NPA for the company would have been at 1.81% compared with 2% as of September 2021.

  • As at December 31, 2021, loans approved under the Emergency Credit Line Guarantee Scheme stood at ₹ 2,215 crore of which, 74% has been disbursed.

  • The cumulative Covid-19 provision as at December 31, 2021 stood at ₹ 1,187 crore, which is 9% of total provisions held.

  • The unaccounted gains on listed investments in subsidiary and associate companies amounted to ₹ 2, 49,914 crore.


HDFC Ltd reported a good set of number, on the profit front where loan growth in Risk on balance sheet increased with RWA to AUM at 69.15% vs 66.46%QOQ, NIM remains stable at 3.6%, flat QOQ, AUM saw a growth of 12.1%YOY, which is the best in 9 quarters, In the loans growth, individual loan growth was robust, up 16%YOY & 4.4%QOQ, Non-individual loan book dragged AUM growth. The rise in NPA ratio is because of RBI new recognition norms. 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 .HDFC Ltd being the leader in the housing finance is expected to benefit from the rise in housing demand and with uptick in overall economy. At the CMP of ₹2612, HDFC is trading at PE multiple of 21x on consolidated basis. Valuing the company at 25x FY23E EPS, we recommend buy on HDFC Ltd at CMP of for the Target Price of ₹ 3290.

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