Buy This Largest NBFC Stock For 1500% Dividend And Good Potential Upside

HDFC Ltd is the largest Non-Banking Finance Company (NBFC) with a market capitalization of Rs 410233 crore. The NBFC is engaged in the housing finance business in the country. It has demonstrated consistent performance in terms of both business growth as well as asset quality. Individual loans contribute ~79% of AUM for the NBFC. Also, a stake in subsidiaries in insurance and asset management business aid value. For the financial year of March 2022 HDFC Ltd has declared the final dividend of 1500% amounting to Rs 30 per share at a face value of Rs 2.

Why should You buy it?

The ICICI Securities has stated, "HDFC Ltd's share price has grown ~2x in past five years. Market leadership in the industry with growth opportunity & strong fundamentals bodes well. However, merger-related uncertainty to keep price in a broad range."

Q4FY22 Performance

According to the ICICI securities, the NBFC has reported healthy overall performance. 
Loan growth at 14.1% YoY wherein individual loans were up 17% YoY
NII up 12.6% YoY, and NIMs steady at 3.5% YoY.
Provisions lower YoY and flat QoQ; thus, PAT is up 16.4% YoY at Rs 3700 crore.
GNPA down 41 bps QoQ to 1.91%. R/s book down 50 bps to 0.8% of loans.

Valuation

The Brokerage has said, "We value HDFC Ltd at ~2x FY24E core ABV and Rs 1452 (post15% discount) for subsidiaries and assign a target price of Rs 2840/share." It added, "We retain the BUY rating on the stock."

Disclaimer

The stock has been picked from the brokerage report of ICICI Securities. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decisions.