ICICI Securities: HDFC - More Than Adequate Buffers To Navigate The Cycle
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ICICI Securities Report
Housing Development Finance Corporation Ltd. has strengthened its balance sheet further with recent capital raise (shoring up Tier-1 to 19.5%) over and above provisioning buffer of 2.64% of asset under management and excess liquidity (at more 5% of balance sheet).
While movement from moratorium 1.0 to moratarium 2.0 has not been overwhelming (higher print at 16.6% for retail and 39% for non-retail) due to request-based disclosure approach (not collection efficiency), flow into restructuring will still be restricted.
Similar to actions in Q4 FY20, HDFC might proactively prefer recognising non-Covid-19 stress upfront (rather than restructuring).
Disbursement trends month on month (more than 80% in July) suggest normalisation in a couple of months and start of growth phase post Q3 FY21.
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