Buy HDFC  :---- target of Rs 800

“HDFC reported PAT at INR10b (in line with our estimates). Business growth remained healthy (loans and AUM up 19% YoY), while spreads and asset quality remained stable. Net interest income (NII) grew 19% YoY to INR13b in line with AUM growth. Net loans and AUMs grew 19% YoY to INR1.48t and INR1.62t respectively. Reported spreads remained stable QoQ at 2.27%, while reported NIM declined to 4.0% from 4.4% in FY12. Individual loans (including sell-downs) grew at a healthy pace by 22% YoY, while corporate loans grew 14% YoY. Incrementally, 90% of the loan growth was driven by individual loans. Share of individual loans in the overall AUM mix increased to 67.4% from 66.5% in 4QFY12.”

“Stock trades at 3.5x FY14E Adj Price/ABV. We believe valuations are reasonable, considering HDFC’s growth potential (FY12-14E EPS CAGR of ~20%), sound business fundamentals, and substantially improved subsidiaries’ performance (life insurance business has turned profitable and unlikely to require further capital infusion). We maintain Buy with an SOTP target price of INR800,” says Motilal Oswal research report.

Institutional holding more than 40% in Indian cos