HDFC Ltd – Financial Resurgence

Housing Development Finance Corporation Limited is an Indian financial services company based in Mumbai. The company is a leading housing finance provider in India. The company provides services in banking, life and general insurance, asset management, venture capital, realty, education, deposits and education loans.

Quarterly Earnings Growth

Housing Development Finance Corporation reported their Net Profit at Rs 7,043 crore for the July-September quarter, which occurs to be a year-on-year (YoY) increase of 24 percent with the support of vigorous growth in loans.

The housing finance company’s total interest income was reported at Rs 8,762 crore, which is an outstanding growth of 31 percent from the same quarter in the previous year. The total revenue from operations was Rs 43,917 crore, which is up from Rs 38,591 crore from the same quarter in the last year.

HDFC’s loan book grew 16 percent YoY on the terms of assets under management. The individual loan book has grown by an astounding 20 percent to Rs 5.9 lakh crore. This is the currently the fastest individual loan book growth on record in the last 8 years for the company.

Chairman’s View

“India is not decoupled from the world and India too will face some slowdown. But here is a consensus across the board that India will still remain amongst the fastest growing major economies in the world,” spoken by Deepak Parekh who is the chairman of HDFC Ltd, while his speech at The Institute of Chartered Accountants of India 21St World Congress of Accountants.

According to Parekh, GDP growth for 2022 might be moderately lesser than 7 per cent, but it should not lead to disappointment.  “What is important to note is the inherent resilience that is now embedded in the Indian economy. I do believe India can grow from a $3.4 trillion economy to a $7.5 trillion economy within the next 5 years,” spoken by Parekh.

“I am never tired of telling people that in all my 50 odd years of my working life, I have never been as optimistic about India as I am today,” said the HDFC veteran who nurtured and bloomed the company into the biggest mortgage lending firm of India, within a course of 3 decades.

“Today, India enjoys political stability, vaccine security and food security. It has maintained good relations with most countries and is increasingly holding its turf on the international arena,” said by Parekh.

The veteran banker has pointed out that India has made an enormous advance on digitalization and financial inclusion. As our economy is propelled by services, India is known as the back office of the world and are now positioning ourselves as a high-end manufacturing hub as well, which was spoken by Parekh.

Technical Analysis

HDFC Ltd’s Weekly Candlestick Chart on Sharekhan’s TradeTiger

HDFC Ltd is making a Head and Shoulders candlestick pattern. The price faces heavy resistance about Rs 2650 and operators are usually dumping their holdings and booking profits. Hence a distribution zone is marked by the two horizontal lines. The stock price trades above the 100-day moving average which indicates that the stock is overpriced. Since the stock prices goes below the average multiple times, shares could be accumulated when the price is below the 100-day moving average. MFI is at 78 points which tells us that the stock is very expensive and hugely overbought.

Backed by the sturdy growth in quarterly earnings results consistently over the last months, we can expect the price of HDFC Ltd to hit Rs 3000 soon. A breakout over the lifetime high of Rs 3027 will take the stock to higher highs which is definitely possible considering the strong progress reported by the company.

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