Monday, February 25, 2013

Sell HDFC recommends Goldman Sachs

Goldman Sachs has downgraded HDFC's stock to 'Sell' from 'Neutral', revising the target price to 740 from 790,  as India's largest mortgage lender could face challenges in retaining market share and maintaining profitability amid rising competition in the housing finance sector.

The housing finance sector growth in India moderated to 16% yoy as of December 2012 against 25% CAGR during 2003 to 2012 sue to which the brokerage house expects HDFC's core earnings growth to moderate at 15% CAGR over FY13E-FY15E vs 19% in FY08-FY13E. The stock is currently trading at an expensive valuation of 3.6 times its 12-month forward core mortgage book.

2 comments:

  1. Sir,

    DLF May fall down from here as it forming bearish engulfing candlestick pattern. It may touch 250 levels.

    ReplyDelete
  2. Goldman may be right regarding the slower growth in housing loans. Retaining market share and profitability might be a challenge. I feel that profitability will not be an issue though market share might dip down.
    Investors in HDFC should also know that they are investing in several other subsidiaries or associate companies HDFC Bank (banking), HDFC Life insurance, general insurance, Credila - education loans, etc. Moreover, HDFC also has a strong relationship with developers and finances high-end projects.

    ReplyDelete

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