Housing Development Finance Corporation (HDFC) share price jumped over 3 per cent to make a fresh 52-week high of Rs 2,658.55 apiece intraday on BSE today. In a BSE filing, HDFC Ltd said that its disbursements in the individual loan category have grown 26 per cent on-year during the third quarter ended December 2020. While for the nine months ended December 31, 2020, individual loan disbursements stood at 86 per cent of the levels in the corresponding period of the previous year. HDFC shares have rallied over 80 per cent from the March low of Rs 1,473.10 apiece. Domestic research and brokerage firm Motilal Oswal Financial Services said that the strong disbursement trend in the festival season sustained throughout the quarter.
HDFC Ltd also said that the individual loan business continued to see improvements during the December quarter. In the last two quarters, loan assignments were muted, but they are back normal levels in the third quarter of the current fiscal. The brokerage firm expects HDFC to report an upfront assignment income of Rs 2.5–3 billion from the sell-down.
According to the exchange filing, the profit on sale of investments stood at Rs 157 crore during the December quarter, which was on account of the sale of 25.48 lakh equity shares of HDFC Life Insurance Company Limited (HDFC Life). HDFC’s shareholding in HDFC Life now stands at 49.99 per cent, which is within the RBI’s mandated regulatory limit of 50 per cent. The company would incur an ESOP expense of Rs 147 crore in the third quarter. The dividend income was minimal, given the stance of its subsidiaries and associates to conserve capital.
HDFC remains one of the preferred picks of Motilal Oswal Financial Services, due to the company’s ability to gain profitable market share despite significant competitive pressures. It said that contrary to initial expectations, the real estate market has seen a swift turnaround. “With incremental cost of funds from the capital markets at 5–5.5 per cent, the company would be able to manage spreads despite the sharp cut in home loan yield,” it added. HDFC has built-in large provision buffers to help it sustain a spike in NPLs in the coming quarters. “We expect the company to deliver core RoE of 12–14% over the medium term,” the brokerage firm said.
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