HDFC's all-time low core valuations offer an interesting proposition

Trading at 1.3x price-to-book, the asking price of the mortgages business fails to capture some of the key developments

Housing Development Finance Corporation (HDFC Ltd) announced over the weekend that it had approved the deployment of Rs 47,000 crore towards affordable housing.

Given that HDFC is often viewed as a firm catering to the mid-to-upper market, this marks a significant change. Higher loans to the affordable housing segment mark its faster penetration into the space. The stock traded in the green on Monday, even though the rise was less than 1 per cent.

However, HDFC’s move to create the largest buffer for tentative asset quality pangs (from Covid-related disruption) of Rs 12,200 crore, and raise Rs 14,000 crore (maximum among NBFCs)