Shares of Housing Development Finance Corporation (HDFC) surged 3.4% to the day's high at Rs 1,568 on Tuesday after the company's earnings in March quarter beat street expectations. The stock had closed at Rs 1,516.55 on BSE yesterday. However, the shares thereafter plunged and were trading at Rs 1,497.50, down 19.05 points, or 1.26% on BSE at the time of reporting.
"HDFC Limited opened with an uptick today despite subdued numbers, in line with other banking and financials major. However, gains fizzled out soon and it's currently trading below the last trading session's low. We might see some respite ahead due to oversold positions and immediate support at 1470 but the upside would also remain capped. Avoid aggressive longs," Ajit Mishra, VP Research, Religare Broking, told BusinessToday.In.
"HDFC Limited results failed to cheer markets as provisions increased with respect to covid moratarium, stock trading near 52 week lows, any decline near 1430 levels will be a good opportunity to add," Vikas Jain, Senior Research Analyst, Reliance Securities, told BusinessToday.In.
HDFC on Monday reported a 30% rise in its consolidated net profit at Rs 22,826 crore for the financial year ended March 31, 2020. The housing finance company posted consolidated net profit of Rs 17,581 crore in the previous year, HDFC said in an exchange filing. The mortgage lender reported a 22% fall in net profit at Rs 2,233 crore in the fourth quarter, compared to Rs 2,862 crore in the year-ago period.
After the results were announced, the analysts at Motilal Oswal said that HDFC's core operating profits had beaten their estimates by 6%. Similarly, Nomura had estimated the net profit at Rs 1,931.8 crore, down 32.5 per cent YoY.
The Net Interest Income (excluding income on assigned loans) for the year ended March 31, 2020 stood at Rs 12,904 crore compared to Rs 11,457 crore in the previous year, representing a growth of 13%.
"We believe that when businesses and operations start to normalize post lockdown eases, HDFC would be a major beneficiary in the NBFC sector. As stated by the CEO himself, that the company is obsessed with growth and growth would come back once the normalcy returns to 80-90% with a decline in NPLs. It is also expected that Q1FY21 would see a slowdown - courtesy lockdown; Q2FY21 is expected to be much better than the previous quarter and by Q4FY21 things should be on the growth path. Hence, investors should hold on to this stock for the long term," Nirali Shah, Senior Research Analyst, Samco Securities, told BusinessToday.In.
HDFC has a market capitalisation of Rs 2,59,547.33 crore.
"HDFC bank is fundamentally strong stock and trading at an attractive valuation of 2.8 times P/ABV as compared to pre-Covid period of 4.5 times. Hence any positive development related to economy and banking industry can trigger sharp buying in the stock," Sundar Sanmukhani, Head of Fundamental Research Desk, Choice Broking, told BusinessToday.In.
Meanwhile, benchmark equity indices - Sensex and Nifty - traded higher on Monday, backed by strong global cues, amid heavy buying in metal and banking scrips. Sensex was trading up 221 points at 30,894, while Nifty was 67 points higher at 9,106.