HDFC has said that it has realized a Rs5,250cr profit from the IPO of its life insurance subsidiary in November 2017realized a made an additional provision of Rs1,575cr. This is 30% of pre-tax gain on HDFC Life stake sale, towards standard assets and other contingencies. This prudent measure will strengthen its balance sheet and improve its capital position for future growth opportunities.
HDFC is also looking to raise about Rs13,000cr to grow its business and for infusion into HDFC Bank. It will be infusing up to Rs8,500cr in HDFC Bank and the balance is expected to be used for growing its affordable housing business.
We remain upbeat on the stock given the bank’s strong competitive funding profile, high operating efficiency, and robust capital position. The stock is trading at ~3.4x FY20E P/BV.
Housing Development Finance Corporation Ltd is currently trading at Rs1,695.75, down by Rs5.15 or 0.3% from its previous closing of Rs1,700.9 on the BSE.
The scrip opened at Rs1,716.9 and has touched a high and low of Rs1,716.9 and Rs1,693.6 respectively.
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