Share Khan update on Housing Development Finance Corporation
Stands out in crowd
The ongoing turmoil in the global financial markets has led to an unprecedented liquidity crunch across the world. The Indian equity markets have been no exception and the domestic benchmark indices have corrected by over 50% from their January 2008 peak. Real estate companies and non-banking finance companies (NBFCs) have been hit the most by the credit crisis. The market value of HDFC, one of the largest housing finance companies in India, has eroded by over 50% from its peak in January 2009.
HDFC has been affected by the high interest rates that have put its spreads under pressure and depressed the demand for real estate. It has also suffered due to expectations of a slowdown in disbursements in the future owing to the ongoing liquidity crunch and fears of rising delinquencies by real estate developers. However, with the regulators announcing unprecedented measures and real estate prices softening by ~15-20% from their peak, there are some initial signs of an improvement in the macro situation. HDFC is likely to see through this tough phase due to various reasons discussed in this report.
Cluster: Evergreen
Recommendation: Buy
Price target: Rs2,805
Current market price: Rs1,350
-Contributed by a blogger
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Comments
Don’t know about the Price Target but with Developers launching affordable projects HDFC can return to its original constituency, the ” Great Indian Middle Class” that helped it flourish for most of its existence. Housing as a key driver of the economy can help not only HDFC recover it’s peak, but also revive the Real Estate Sector.
Hope they sieze the opportunity coming their way,
I found your blog on MSN Search. Nice writing. I will check back to read more.
Eric Hundin