HDFC regains Rs 4 trillion m-cap; stock surges 6%, hits over 8-month high

At 01:01 pm, HDFC market capitalisation (market-cap) stood at Rs 4.11 trillion on the BSE.

Housing Development Finance Corporation (HDFC) regained the Rs 4 trillion-market capitalisation after the stock of the housing finance company rallied 6 per cent, hitting an over eight-month high of Rs 2,285 on the BSE on Tuesday. It was trading at its highest level since February 27, 2020. It had hit a 52-week high of Rs 2,500 on January 14, 2020.

At 01:01 pm, HDFC's market capitalisation (market-cap) stood at Rs 4.11 trillion on the BSE, exchange data shows. In comparison, the S&P BSE Sensex was up 1.5 per cent at 43,245 points.

Thus far in November, the stock of HDFC has advanced 19 per cent after the company reported higher-than-estimated September quarter (Q2FY21) numbers, led by improvement in asset quality and steady assets under management (AUM) growth.

However, HDFC’s net profit dipped 27.6 per cent to Rs 2,870 crore in Q2FY21 from Rs 3,962 crore in the corresponding period a year ago. The numbers for Q2FY21 were not directly comparable with the previous year because it had huge income from the dividend and sale of investments in Q2FY20.

The net interest income (NII) rose 21 per cent in Q2 to Rs 3,647 crore from Rs 3,021 crore the previous year. The assets under management (AUM) grew 10.2 per cent to Rs 5.40 trillion in Q2FY20 from Rs 4.90 trillion a year ago. Individual loans comprise 75 per cent of AUM. Asset quality improved with gross non-performing assets (GNPA) improved 6 basis points quarter-on-quarter to 1.81 per cent.

With the unlocking of the Indian economy, traction in individual loans gained momentum with successive month-on-month improvements. The prevailing low-interest rates, softer property prices, reduction in stamp duty in certain states, and inherent strong demand for home loans bodes well for the housing finance sector, the management said. The months of September and October 2020 have seen the strongest recovery since the outbreak of the pandemic, it said.

“HDFC has reported a strong improvement in collection efficiency at 96.3 per cent for September 20 (post moratorium). Our discussion with management suggests a further improvement in efficiency, including the previous month's dues. Most customers under the moratorium have opted for the tenure extension and have started paying regularly after the moratorium ended,” Emkay Global Financial Services said in the result update.

The brokerage firm believes that the company is able to gain market share, especially from other housing finance companies and even smaller banks, due to its superior liability franchise providing it an advantage on the cost of funds. The major demand revival is expected through balance transfers, which is not a sustainable source. We would wait for further clarity and data points over the actual rise in demand for real estate in the coming quarters, it said.