Buy Housing Development Finance Corporation; target of Rs 3589: Sharekhan

Sharekhan's research report on Housing Development Finance Corporation

We believe HDFC is the strongest player in housing finance space and better-placed among all its peers with a robust liability franchise, healthy balance sheet with growth levers. HDFC has consistently performed well as compared to its peers across business cycles. Better affordability and a change in housing needs post the pandemic, make HDFC a key beneficiary of changing sector dynamics. We expect the company’s loan book to witness strong growth going ahead with individual loan book to remain healthy for the company; on the asset quality front, HDFC has been able to maintain its GNPAs better than its peers (September GNPAs were at 2% with restructured loans constituting 1.4% of loan book).

Outlook

We re-iterate a Buy on HFDC with a SOTP based PT of Rs. 3,589. At CMP, HDFC trades at 3.9x of FY23E P/BV. The stock has corrected by 14% from the highs and touched a low of Rs. 2,656.