HDFC gains 5% on improvement in business volumes in September quarter

Shares of Housing Development Finance Corporation (HDFC) jumped 5 per cent to Rs 1,874 on the BSE on Tuesday after the housing finance company said the individual loan business saw see a sequential month-on-month improvement in the period July to September 2020 (Q2FY21).

The quarter witnessed a strong recovery with individual loan disbursements reaching 95 per cent of pre-Covid levels. The number of loan applications received during Q2FY21 grew 21 per cent year on year (YoY) and 12 per cent quarter on quarter (QoQ) while individual loan approvals grew 31 per cent YoY and 9 per cent QoQ, it said.

"The month of September 2020 has seen the strongest recovery since the outbreak of the pandemic and the levels have exceeded the levels in the corresponding month of the previous year," HDFC said.

“While this is encouraging in the backdrop of the overall economic environment, a bigger positive is that continued improvement has been seen month-on-month. While loan assignments more than doubled QoQ to Rs 3,000 crore, they were still significantly below YoY levels of Rs 7,200 crore. We believe the company would earn Rs 250 crore – Rs 300 crore upfront assignment income during the quarter,” Motilal Oswal Securities said in stock update.

HDFC remains among our top picks in the sector. The Real Estate sector is seeing a gradual turnaround and HDFC is well-poised to benefit from the same. In addition, with muted competitive pressure from other NBFCs, HDFC is likely to gain profitable market share in the Financing space. Business volumes have largely normalized on the Retail Lending side – we expect the company to deliver disbursement growth in 2HFY21. Corporate Lending is likely to be opportunistic, the brokerage firm said.

At 09:30 am, HDFC was trading nearly 4 per cent higher at Rs 1,849 on the BSE, against 0.73 per cent rise in the S&P BSE Sensex. The counter has seen huge trading volumes with a combined 2.9 million equity shares were changing hands on the NSE and BSE, so far.