HDFC: Rebuilding trust

HDFC: Rebuilding trust

Shares of Housing Development Finance Corporation (HDFC) gained 4% in early trade Tuesday after the mortgage lenders’ individual loan business saw 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% of pre-Covid levels. The number of loan applications received during Q2FY21 grew 21% year on year (YoY) and 12% quarter on quarter (QoQ) while individual loan approvals grew 31% YoY and 9% QoQ.
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.
Loan assignments more than doubled QoQ to Rs 3,000 crore, they were still significantly below YoY levels of Rs 7,200 crore. HDFC is expected to earn Rs 250 crore – Rs 300 crore upfront assignment income during the quarter.
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.
HDFC is expected to deliver disbursement growth in 2HFY21. Corporate Lending is likely to be opportunistic.

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