HDFC’s core lending business is getting valued at 1.8x FY23 estimated book value. Along with re-rating of the core mortgage business, the future stock upside will be driven by its subsidiaries and associate companies doing well. LIC Housing is trading at 1x its trailing book value for FY21 and at 0.8x book value estimated for FY23E, which is low compared to its historical average valuation. The weak performance in the near term will keep the stock range-bound. Long term investors however can use this opportunity to accumulate the stock. Overall, HDFC should be a core holding in investors’ portfolio and LIC Housing can be a good tactical bet given its distressed valuation.
first published: Aug 3, 2021 09:05 pm
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