Public sector banks (PSBs) have announced a special package for home loan borrowers, as part of the stimulus package, to spur demand for residential property. Importantly, the special package will be available only for new home purchases and not for refinancing existing borrowers.
We believe that HDFC is among the better-diversified players in the Indian financial services space with leadership position in mortgage market and strong presence in other financial services (life insurance, asset management and banking).
Operationally, HDFC’s fund mobilization abilities and operational efficiency should help maintain healthy earnings momentum in a tough operating environment.
At the current market price of Rs1,545, the stock trades at 15.1x its FY2010E earnings per share of Rs102.1 and 2.8x its FY2010E book value per share of Rs544.3. We maintain our BUY recommendation with a price target of Rs2,805.