HDFC Climbs Over 5% After Cutting Retail Prime Lending Rate

On Tuesday, shares of Housing Development Finance Corporation (HDFC) surged over 5 percent to Rs 2,263 after the mortgage lender announced cutting its retail prime lending rate (RPLR) on housing loans by 10 basis points (0.10 percent).

"HDFC reduces its Retail Prime Lending Rate (RPLR) on housing loans, on which its Adjustable Rate Home Loans (ARHL) are benchmarked, by 10 basis points, with effect from November 10, 2020," HDFC said in a release.

The change will benefit all existing HDFC retail home loan customers, it added.

Brokerage review

Recently Sharekhan had recommended a "buy" rating on the stock with a target price of Rs 2,400 after the Q2 results of the company.

"Q2 FY2021 results were strong, with operational results beating expectations; asset quality improved sequentially and margins too rose. Overall collection efficiency for individual loans stood at 96.3% in September (first month after RBI moratorium ended) which is encouraging. Asset quality improved with overall NPA ratio falling 6 bps q-o-q to 1.81%; company is better capitalised (Tier-I at 19.5%; up from 16.2% in Q1 FY2021) which adds to balance sheet strength," the brokerage said.

"HDFC is currently available at reasonable valuations of 3.7x / 3.4x its FY2022E / FY2023E ABV," it added.

The company reported a 27.5 percent decline in its net profit to Rs 2,870.12 crore for the September-ended quarter from Rs 3,961.53 crore a year ago. HDFC's total income stood at Rs 11,732.70 crore in the same period, falling 13 percent from Rs 13,494.12 crore in the same period a year ago.