HDFC slips 4%, hits 52-week low; down 11% in 8-days post Q3 results

The company had recently reported a 11 per cent jump in net profit at Rs 3,261 crore, on the back of higher income and lower-than-expected credit loss.

Shares of Housing Development Finance Corporation (HDFC Ltd) hit a 52-week low of Rs 2,321, down 4 per cent on the BSE in Monday’s intra-day trade. In comparison, the S&P BSE Sensex was down 2.3 per cent at 56,858 at 09:53 am.

The stock of mortgage lender has fallen 11 per cent in the last eight trading sessions after the company announced its December quarter (Q3FY22) results on February 2, 2022. The stock dropped below its previous low of Rs 2,354.10 touched on May 5, 2021.

In Q3FY22, HDFC reported a 11 per cent jump in net profit at Rs 3,261 crore, on the back of higher income and lower-than-expected credit loss. Net interest income (NII) of the mortgage lender increased by 7 per cent to Rs 4,284 crore in Q3FY22 compared to Rs 4,005 crore in the year-ago period and net interest margin, a measure of profitability, stood at 3.6 per cent.

Asset quality inched up because the lender recognised some loans as non-performing, which were overdue for less than 90 days. The gross non-performing loans (NPLs) of the lender stood at 2.32 per cent, up 32 basis points sequentially.

Analysts at JP Morgan see HDFC as a low-risk play in the current environment. The company has excess capital and provisions to take care of any large hits in its developer book. Furthermore, mortgage is one of the few sectors where we believe asset quality will hold up in the current environment, the brokerage firm said in Q3 result update.

Competition from State Bank of India (SBI) and other public sector banks is likely to be intense, but HDFC has offsets available in falling cost of funds, improved pricing in the corporate business and better servicing. “We believe the stock offers growth with reasonable value and should remain a core India holding for long-term investors,” JP Morgan said.