HDFC board approves raising Rs13,000cr via Preferential Issue, QIP
HDFC board has approved raising of Rs13,000cr by selling shares to a consortium of institutional investors, including Waverly Pte. Ltd, OMERS Administration Corp, KKR-affiliate Silverview Investments Pte., Carmignac Group and Premji Invest. HDFC would issue 6.43 cr equity shares at Rs1,726.05 per share to 10 investors totaling Rs11,104 cr. In addition, it will also raise up to Rs1,896cr via QIP. Of the funds raised, Rs8,500cr will go towards subscribing to the preferential allotment of its banking arm HDFC Bank Ltd. This will improve its stake in HDFC Bank, which will act as a positive for the mortgage lender. Besides, it is also considering expanding into Health Insurance in a big way through HDFC Ergo General Insurance Company. On Monday, the stock is likely to react on a positive note.
HDFC remains one of our preferred pick among mortgage financiers, given its improving earnings outlook, upside from robust performance of the group companies. Demand for retail mortgages appears to be tracking up post demonetisation. Demand for non-retail too is showing signs of improvement, led by uptick in rental discounting. We forecast of 21% CAGR for retail and non-retail mortgages over FY17-20E. Despite intensified competition for lending, HDFC is likely to deliver stable margins, driven by sustained fall in its borrowing cost. These factors are likely to drive 21% CAGR in EPS over FY17-20. We have positive outlook on the stock.
Housing Development Finance Corporation Ltd ended at Rs1,750.55, up by Rs9.75 or 0.56% from its previous closing of Rs1,740.8 on the BSE.
The scrip opened at Rs1,723.2 and touched a high and low of Rs1,764.5 and Rs1,723.2, respectively.
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Via:: Stock – India Infoline