Housing Development Finance Corp (HDFC) reported a strong performance in the December quarter with better than expected net interest income. NII increased 26 percent year-on-year to Rs 4,068 crore from Rs 3,240 crore in the previous year.

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However, its standalone profit fell 65 percent to Rs 2,925.8 crore versus Rs 8,372.5 crore in the corresponding period. The profit in Q3FY20 includes proceeds from stake sale in GRUH Finance which was merged with Bandhan Bank in October 2019, hence the company says it is not comparable.

However, it posted a consolidated net profit of Rs 5,724.23 crore for the third quarter of 2020-21 fiscal against that of Rs 4,196.48 crore in the October-December period of the previous fiscal year.

Gross non-performing assets increased to 1.67 percent of total loans from 1.36 percent a year earlier. NPAs from loans to individuals were at 0.79 percent of loans and 4 percent from non-individual loans.

Brokerages retained their bullish view on the stock after their earnings on the back of higher margins and better than expected NII. Morgan Stanley has an 'overweight' call on the stock while CLSA and Jefferies raised their target prices for the stock.

Here is what brokerages have to say about the stock and the company after the Q3 numbers:

Jefferies

Jefferies has a 'buy' call on the stock and raised the target to Rs 3,340 from Rs 3,170 per share.

As per the brokerage, the Q3 profit was led by a better topline, while the two key positives are strong disbursement growth and stable asset quality. The lender is well placed to leverage housing demand and potential construction financing, it added.

The loan growth can improve from 9-10 percent to 15 percent over FY22-23, said Jefferies and raised earnings estimates by 5-6 percent to factor in a better topline and lower provisions.

CLSA

CLSA has an 'outperform' rating on the stock and raised the target to Rs 3,000 from Rs 2,850 per share. According to CLSA, the Q3 performance is strong, with a big beat on NII. It has an adequate provision of 1.4 percent of AUMs and NIMs improved by 20 bps QoQ is a positive surprise. It also raised FY22/23 earnings estimates by 4-5 percent on higher margins. It has built adequate buffers and provisioning should normalise during FY22/23, added CLSA.

Credit Suisse

The brokerage has an 'outperform' rating and raised the target to Rs 2,950 per share. It said that the individual growth remains strong and asset quality stable with healthy provisioning. CS further noted that the lender is comfortably capitalised and a beneficiary of low funding costs. It also raised EPS estimates by 7-8 percent on stronger growth.

Morgan Stanley

The brokerage maintained an 'overweight' call on the stock and the target is raised to Rs 3,200 per share. As per MS, the retail disbursements and revenue momentum for the lender are strong, while strong provisioning coverage and potential for write-backs should whet risk appetite. Investors see the company as a play on a nascent recovery in real estate, it said, adding that the valuation could re-rate from the 5-year average level.