HDFC surges over 5% on value buying

The shares of the biggest mortgage lender have fallen by 19% in the past one month, compared to a 8.5% decline in the CNX Nifty.

Shares of Housing Development Finance Corporation (HDFC) have moved higher by nearly 7% to Rs 1,174 on the National Stock Exchange (NSE) on value buying.

In the past one month, the stock of the biggest mortgage lender had fallen 19% from Rs 1,359 to Rs 1,102 compared to a 8.5% decline in the CNX Nifty.

IIFL Institutional Securities has maintained a ‘buy’ rating on the stock, with a target price of Rs 1,600. “Our expectations are underpinned by gradual improvement in growth outlook for the non-retail segment and reduction in funding cost due to new and competitive sources. HDFC enjoys significant operating leverage and would reap these benefits with improvement in the macroeconomic environment, which would, engender upside to earnings growth,” the brokerage house analysts said in a report dated July 29, 2015.

JP Morgan has maintained an ‘Overweight’ on the stock, with a target price of Rs 1,400 as the broking firm sees support from accelerating earnings growth as also overall earnings and balance sheet quality.

“HDFC’s competitive position improves with falling rates – the COF traction is faster given it’s wholesale-funded, but the price competition isn’t as fierce as the base rate system constrains the banks. We do not expect a major impact on headline margins, but falling rates could help growth and market share,” JP Morgan said in a report dated July 28.