BackHDFC board approves issuance of NCDs worth ₹57,000 cr in tranches. What should investors do?
On the back of its strong fundamentals, HDFC has emerged as one of the most consistently performing companies in the NBFC space. These capital fundraising is seen as a positive move.
PremiumThe board of directors of NBFC giant HDFC on Monday approved the issuance of non-convertible debentures worth ₹57,000 crore on a private placement basis. Also, the board gave a go-ahead on increasing the company's overall borrowing powers to ₹6.50 lakh crore. On the back of its strong fundamentals, HDFC has emerged as one of the most consistently performing companies in the NBFC space. These capital fundraising is seen as a positive move.
In its regulatory filing, HDFC said, the board of directors granted approval for "issuance of unsecured redeemable non-convertible debentures under a Shelf Placement Memorandum, aggregating ₹57,000 crore."
The NCDs will be issued in various tranches and on a private placement basis.
This NCDs issuance is in line with the approval granted by HDFC's shareholders at the 45th annual general meeting on June 30 last year.
Further, HDFC's board approved the increase in the overall borrowing powers of the company to ₹6.50 lakh crore --- compared to the earlier ₹6 lakh crore, outstanding at any point in time.
The increase in the borrowing limit has been recommended to seek approval from the members of HDFC through a postal ballot.
In the filing, HDFC said, "The said decision was taken since the outstanding borrowings of the Corporation as on date is approx. ₹5.70 lakh crore and the Corporation would need to borrow further for its business purposes till the effective date of the merger."
Additionally, the board members also approved the grant of 10,000 stock options representing 10,000 equity shares of ₹2 each of HDFC to eligible employees under ESOS – 2020.
Under the employees' stock option scheme, each option upon exercise would be entitled to allotment of one equity share of ₹2 each of HDFC at an exercise price of ₹2,559.90 per equity share.
On BSE, HDFC's share price closed at ₹2563 apiece on Monday broadly flat compared to the previous closing. The company's market cap is around ₹4.70 lakh crore.
Giving a technical view, A R Ramachandran, Co-founder & Trainer-Tips2trades said, “given the strong fundamentals where HDFC Limited remains one of the most consistently performing companies in the NBFC sector," adding, "the news related to additional capital raising is another positive for investors to buy & hold HDFC."
Ramachandran added, "strong parentage coupled with steady ROE & profit margins with the recent market correction make HDFC Limited a good Buy. Technically, investors can buy if the Daily close is above 2600 for targets of 2680-2800 in the near term. Support will be at 2510."
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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