HDFC dips 1% ahead of Q3 nos; analysts eye 20% YoY loan growth, weak NIM

Shares of Housing Development Finance Corporation (HDFC) slipped 1.4 per cent to Rs 2,416.05 on the BSE on Monday ahead of its December quarter results for FY20 (Q3FY20) scheduled to be released later today.
 

At 10:32 am, the stock was trading 0.93 per cent lower at Rs 2,428 per share, as against a 0.26 per cent fall in the S&P BSE Sensex. So far in Calendar year 2020, the stock of the housing finance corporation has outpaced the market by rising 1.5 per cent till Friday, January 24. In comparison, the S&P BSE Sensex was up 0.87 per cent.
 

Analysts expect the non-banking finance company (NBFC) to report healthy loan growth amid weak net interest income and weak margins.
 

“We expect HDFC’s loan growth to remain healthy at nearly 19 per cent, backed by strong demand in the affordable segment… NIMs, however, will be under pressure on external benchmark linkage,” said analysts at Emkay Global Securities.

They peg the NII growth at 23.26 per cent year-on-year (YoY) at Rs 4,097 crore, as against a NII of Rs 3,323.9 crore reported in Q3FY19. The same was Rs 4,036.3 crore in Q2FY20.

Analysts at ICICI Securities, on the other hand, foresee the loan growth at 13 per cent to Rs 4.35 lakh crore. 

“NII seen growing at 5 per cent YoY to Rs 2,830 crore factoring spreads contained around 2.26 per cent and lower growth in non-individual loans. Thereby expect flat NIM at around 2.27 per cent,” they wrote in an earnings preview note.

For the recently concluded quarter, net profit is seen varying from Rs 2,263.8 crore (up 11 per cent YoY) to Rs 7,530.2 crore (up 256 per cent YoY). The higher PAT growth, however, is seen after factoring gain from sale of stake in Gruh Finance. 

The NBFC had logged a net profit of Rs 2,113.8 crore in Q3FY19, and Rs 3,961.6 crore in Q2FY20. 

On the assets under management (AUM) front, analysts at Prabhudas Lilladher expect a 12 per cent loan growth as corporate book consolidates, but overall AUM traction at 15 per cent.

“Credit costs trends continue to stay higher as 30% of investment gains are earmarked as extra provisioning buffer; although not as high as Q2,” they wrote in a result’s preview note.

Analysts would track outlook of the NBFC on developer loan portfolio, revival of real estate sector demand, management’s commentary on NIMs, market share and competition, concern on its asset quality and outlook on growth and capital raise