HDFC Ltd Stock Analysis | Why Price going up?

HDFC Ltd Latest Quarterly Results Analysis | Q2FY21

Introduction

Recently HDFC Ltd declared its latest quarterly results. Company’s revenue and profitability declined on a YoY basis. Let us analyse company’s Q2FY21 results in this blog.

HDFC Ltd Q2FY21 Results Analysis

Revenue and Profitability

• Interest Income registered a muted growth on QoQ and YoY basis, whereas Interest expenses have plummeted by a decent percentage. This is mainly due to lower interest rates on deposits and borrowings.
• This boosted the Net Interest Income (NII) by 21% on YoY and 7.5% on QoQ basis.
• Due to robust increase in Net Interest Income, profit before dividend, sale of investment and fair value changes & ECL has grown by 20% on YoY basis.
• This profit is the core profitability of the company excluding the other one time factors.
• Company recorded significantly lower other income in this quarter, however on the positive side, provisions also declined significantly.
• Lower provisions insulated the profit before tax from declining further due to lower other income in this quarter.
• Tax rate applicable for this quarter is 19% as against 13% and 15% in last year and last quarter respectively.
• Increasing tax rate further dragged the profit 28% and 6% on YoY and QoQ basis.

Why HDFC Stock Price is going up?

• One of the reasons for recent stock price rally is the positive sentiment in the market which is leading to NIFTY and SENSEX making new highs everyday.
• Also HDFC’s profile, subsidiaries valuation and robust core business performance in latest quarter have spurred its stock price rally by 44%.