HDFC rallies 2% to hit all-time high of Rs 2,363; analysts remain bullish

Shares of Housing Development Finance Corporation (HDFC) hit an all-time high of Rs 2,363, up 2 per cent on the BSE on Friday after the company completed the acquisition of HDFC Credila Financial Services. The stock surpassed has its previous high of Rs 2,357 hit on July 18, 2019.

“The Corporation has completed acquisition of 11.47 million equity shares, representing 9.12 per cent of total equity of HDFC Credila for a total consideration of Rs 395 crore, from its promoter Ajay Bohora and Anil Bohora,” HDFC said in a regulatory filing.

Accordingly, HDFC Credila has become a wholly owned subsidiary of the Corporation, it added.

HDFC Credila is a non-banking financial company (NBFC) and is in the business of providing loans for higher education.

With the today’s gain, the stock of HDFC rallied 20 per cent from its recent low of Rs 1,969 on October 7, 2019. In comparison, the S&P BSE Sensex was up 9 per cent during the same period.

Analysts see HDFC as a low-risk play on an improving underlying housing cycle. They believe the stock offers growth with reasonable value and should remain a core holding.

“HDFC’s book quality is one of the best among its mortgage peer group, and the company remains the lowest-cost mortgage provider in India,” analysts at JP Morgan said in a note. The brokerage firm has ‘overweight’ rating on HDFC with March 2020 price target of Rs 2,700 per cent.

“We believe most of HDFC’s underlying subs are market leaders in their respective segments and should continue to deliver double-digit returns ahead and thus remain supportive of the parentco’s valuations. We believe parent HDFC has enough provisioning buffers to take care of any underlying stress in project loans. Competitive intensity from SBI in mortgage loans and customer behavior on switching to PSBs will be key to watch for determining the trajectory of growth for the mortgage business ahead,” it added.