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HDFC Ltd.: Pick up in business growth

News: HDFC Ltd posted a healthy operational performance with NII growth of 18.4% YoY to Rs.4109 crore. Reported NIM came in at 3.6%, up ~40 bps YoY but down 10 bps QoQ. Other income came in at Rs.1544 crore, up 79% YoY, largely aided by dividend income, which was at Rs. 1171 crore vs. 16 crore YoY. The corporation has made provisions worth Rs.452 crore during the quarter while net profit was at Rs. 3781 crore, in line with our estimates. Asset quality improved on a sequential basis with GNPA declining 24 bps to 2%. GNPA in individual segment came down to 1.1% from 1.37% QoQ while NPA in non-individual book declined to 4.69% vs. 4.87%. Collection efficiency for individual loans on cumulative basis was steady QoQ at 98%. Total restructuring is now at 1.4% of loans against 0.9% in the previous quarter. AUM growth picked up as it was up 9.6% YoY and 4% QoQ to Rs. 5.2 lakh crore. Growth in the individual segment was healthy at 16% YoY (AUM basis).

Views: We believe positive momentum in real estate market along with benign interest rates augurs well for growth especially for market dominant player like HDFC Ltd.