HDFC declined on profit-booking on Monday after a sustained rise in the last few sessions.
The scrip of the housing finance major shed 3.12% to Rs 348.40 on the BSE, registering a volume of 19,073 shares by 14:40 IST. In the last four sessions, between 25 April and 2 May 2003, it rose by 22% to Rs 359.35 from Rs 295. Earlier, between 11 and 25 April 2003, the scrip, in eight sessions, lost 14.5% from Rs 344.95.
Dealers said the Housing Development Finance Corporation scrip witnessed a correction after a rally in the last few sessions. The major trigger for the scrip came from the Reserve Bank of India's Credit Policy for the year 2003-04 (unveiled on 29 April 2003), which cut the bank rate by 25 basis points to 6% with immediate effect, and reduced the cash reserve ratio by 25 basis points to 4.50% from 4.75% (effective 14 June 2003). The repo rates were left unchanged. The Credit Policy is seen to be favourable to housing finance companies.
The bank rate cut may lead to a cut in the housing finance rates, which will spur the demand for housing loans. Interest rates on housing finance loans have plunged to 9-10% as of now from 13-14% about two years ago and from a level of as much as 18% a few years ago.
There were also reports that International Finance Corporation, a private sector funding arm of the World Bank, has approved loans amounting to $200-million loan to HDFC. The loans are dollar-denominated.
HDFC is awaiting the government's approval before it avails of the loans. IFC has offered to provide two separate long-term loans - one loan amounting to $100-150 million for a period of eight years and the other, for $50-100 million for a tenure of six years.
The loans will go a long way in propping up HDFC's re-vitalised focus on the middle and lower income segment with attractive housing schemes. HDFC, the largest provider of housing loans in the country, has been hard-pressed by growing and aggressive competition from other home loan financiers like ICICI Bank and State Bank of India.
However, analysts still feel that the competition in the housing finance sector is a major cause for concern. HDFC faces increasing competition from players like ICICI Bank, State Bank of India and LIC Housing Finance.
For the third quarter ended 31 December 2002, HDFC registered a 21% rise in net profit to Rs 146.65 crore (Rs 1.46 billion) on a 11% increase in total income to Rs 740.13 crore (Rs 7.4 billion).
As on 31 March 2003, institutions and the public held 59.70% and 15.52% equity stake in HDFC respectively.
BSE code: 500010
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