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market | IST

HDFC shares gain over 6% as loan approvals in Sept quarter improve

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The share price of mortgage lender HDFC Ltd rallied over 6 percent in the early trade on Tuesday as the company’s loan approvals during the quarter ended September 2020 improved.

The share price of mortgage lender HDFC Ltd rallied over 6 percent in the early trade on Tuesday as the company’s loan approvals during the quarter ended September 2020 improved.
HDFC reported a 9 percent rise in individual loan approvals in the September quarter as compared to the corresponding quarter of the previous year.
However, individual loan disbursements were down 5 percent, YoY.
“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 in a regulatory filing on Monday.
HDFC Ltd. had a moratorium-2 book of 22 percent with a 16 percent moratorium for its individual book and 39 percent moratorium for its non-individual book, and within its non-individual book, the majority of the moratorium is in its builder book.
Global brokerage firm CLSA believes that the pick-up in growth was stronger than expected, and this, coupled with increasing mortgage spreads, was positive for NII and PPOP growth for HDFC Ltd.
“We are less concerned about individual moratorium given strong underwriting, low LGD and the RBI's restructuring window. Rs 400 billion+ in builder loan moratorium remains a key overhang and will be a key metric to track over the next two quarters,” CLSA said.
The brokerage has maintained an 'Outperform' rating with a price target of Rs 2,100.
The stock price of HDFC gained as much as 6.67 percent to an intraday high of Rs 1,904.60 on the BSE. At 11:55 am, the shares were trading 6.51 percent higher at Rs 1,901.50 apiece as against 0.88 percent gains in the benchmark Sensex.