Q1FY23 Preview: HDFC: Net Interest Income seen at Rs46.6 billion, PAT at Rs41.0 billion

28 Jul 2022 , 10:16 AM

Result date: 29^th July, 2022
Recommendation: Buy
Target price: Rs2,915

HDFC is likely to record AUM growth of 3.6% sequentially, and an improved year-on-year growth of 18% in the June 2022 quarter. Stronger growth in the individual segment will be a key highlight.

Analysts at IIFL Capital Services expect a marginal compression in spreads sequentially, however, higher dividend income (Rs6.9 billion versus Rs1.3 billion) is likely to drive strong sequential growth in net operating income. Credit cost is expected to remain steady at 25 basis points of AUM.

Lower provisions as compared to the year-ago quarter and mid-single digit increase sequentially could drive bottomline. Consequently, Profit After Tax or PAT could grow by 37%.

Important management insights to watch out for:

• Trends in AUM growth, spreads
• Update on merger with HDFC Bank
• Outlook on asset quality

(Rs billion)	June 2022 estimates	YoY change	QoQ change
Net Interest Income (ex-assignment income)	46.6	13%	1%
Net Operating Income	60.4	17%	9%
Pre Provisioning Op. Profit	55.4	21%	10%
Profit After Tax	41.0	37%	11%

Source: IIFL Research