HDFC's 2Q results were largely in line, with PAT up 63% YoY, on the back of dividend income and gains from Gruh stake sale.

Key insights

  1. Loan growth remained stable at ~13%, with individual AUM up 17% YoY and disbursements up 12% YoY while deposit growth remained strong (+8% QoQ, 29% YoY).
  2. NII growth though was modest at 10% YoY, while spreads and margins net of securitisation were stable at 3.3%.
  3. Asset quality was stable

Valuation and view: We believe HDFC Ltd is favorably positioned vs its peers (positive catalyst watch) given its strong franchise and easy access to funding.

In the current liquidity scenario, well-established companies with a strong parentage would get a clear preference in raising money from debt markets and banks - HDFC is well placed to capitalize on this.

Despite having an INR1.2trillion+ deposit base, incremental traction is stronger than ever. Subsidiaries are performing well and contribute 50%+ of SOTP. Core mortgage book (ex-subs) trades at 2.0x FY21E P/B.

Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.

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