HDFC Group shares rally; HDFC, HDFC Bank, HDFC Standard Life hits new high

Shares of HDFC Group companies were in focus with most of the frontline stocks – HDFC Bank, Housing Development Finance Corporation (HDFC) and HDFC Standard Life Insurance – hitting their respective new highs on the National Stock Exchange (NSE) in intra-day trade on Monday.

These three stocks were up in the range of 2% to 7%, while Gruh Finance was trading 1% higher at Rs 510. On comparison, the Nifty 50 index was up 0.66% at 10,752 points at 01:55 PM.

HDFC Group's market capitalisation crosses Rs 9,000 billion marks to Rs 9,056 billion is the second largest among the Indian business houses after Tata Group. The combined market-cap of Tata Group's listed companies was stood at Rs 10,150 billion as on January 12, 2018, the Capitaline Plus data shows.

HDFC has surged 7% to Rs 1,879 after its board approved fund raising worth Rs 130 billion through a combination of a preferential allotment and Qualified Institutions Placement (QIP). The stock surpassed its previous high of Rs 1,805 touched on November 7, 2017 in intra-day trade.

"The key objective of raising capital is to participate in the preferential issue of HDFC Bank up to an amount not exceeding Rs 85 billion. This would enable the Corporation to maintain its current shareholding in HDFC Bank," HDFC said in a press release.

HDFC Bank too hit a new high of Rs 1,904, up 2%, surpasses its previous high of Rs 1,903, touched on December 20, 2017 in intra-day trade.

HDFC said it is also exploring inorganic opportunities in the health insurance sector in conjunction with its subsidiary HDFC ERGO General Insurance Company and is evaluating opportunities in the acquisition and resolution of stressed assets in the real estate sector, it said.

"The Corporation will also need capital to sponsor funds it has set up to invest in the equity and mezzanine debt of affordable housing projects, support capital requirements of its subsidiary companies as and when required and capitalise on organic and inorganic growth opportunities in the affordable housing finance space," it added.

HDFC Standard Life Insurance Company soared 7% to Rs 488, its highest level since listing on November 17, 2017. The stock appreciated 68% against issue price of Rs 290 per share.

“HDFC new capital raising is a positive development, in our view, given its investment in HDFC Bank, which is anticipating growth, and investments in growing businesses like general insurance,” analyst at Elara Capital said in recent report. The brokerage retains ‘accumulate’ rating on HDFC, with target price of Rs 1,911.

The brokerage firm Sharekhan believes that the premium valuations of the HDFC stock justified due to high earnings visibility and stellar operating metrics and thus maintain a BUY rating on the stock with price target of Rs 1,900.

Capital-raising would enable HDFC Bank to maintain a healthy growth trajectory and deliver sustained performance on most operating parameters. With a strong retail network and healthy liability franchise, the bank is well poised to make most opportunities count in the retail lending segment going ahead, it added. It maintains ‘buy’ rating on the stock with price target of Rs 2,100.

HDFC 1864.95 1879.00 1804.00 07-Nov-17
HDFC BANK 1901.50 1904.40 1903.10 20-Dec-17
HDFC STAND. LIFE 477.70 488.00 458.70 12-Jan-18

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