>HDFC {Housing Development Finance Corporation} JP MORGAN

4Q09: Positive surprises - ALERT

• HDFC surprises positively on 4Q numbers with the bottom line at Rs7334mn, 11% above our and Street estimates, reporting 16% growth at the pretax, pre-extraordinary level.

• Hence the stock was up a significant 13.8%% today and has outperformed the Sensex by 22.6% since its recent lows in March.

• 4Q09: Retail and wholesale disbursement growth was healthier than expected at 17% firm spreads at 2.2%. Cost-income ratio continues to improve and so does asset quality.

• Demand dynamics: Consumer and wholesale demand expected to grow 18-20% in FY10E with average loan size at Rs1.5 million. Boost expected in 2H10E as real estate prices and interest rates bottom out.

• Valuations: Stock trades at 3.6x FY10E book. Momentum appears to be swinging back in favour of retail asset-led and wholesale liability-led financial intermediaries. Reiterate Overweight.

To see full report: HDFC