Sensex

Monday, November 19, 2007

$$ DreamGains !! $$ FW: HDFC: Sharekhan Stock Idea dated November 19, 2007

 

 

From: The Sharekhan Research Team [mailto:marketwatch@research.sharekhan.com]
Sent: 19 November 2007 18:49
To: The Sharekhan Research Team
Subject: HDFC: Sharekhan Stock Idea dated November 19, 2007

 

 

Stock Idea
[November 19, 2007] Please see the attachment for details

Sharekhan
www.sharekhan.com

Summary of Contents

Housing Development Finance Corporation     
Cluster: Evergreen
Recommendation: Buy
Price target: Rs3,362
Current market price: Rs2,700

In a sweet spot

Key points 

  • Subsidiaries hold significant value: HDFC has created significant value in its subsidiaries. Three of these—HDFC Bank, HDFC Life Insurance and HDFC Mutual Fund—are valued at Rs883 per share. These subsidiaries are growing faster than HDFC, the value contributed by them would be significantly higher going forward.
  • Gaining market share, CRR hikes also helping the cause: HDFC has gained significant market share in the past couple of quarters. Also, continuous CRR hikes by the RBI have benefited HDFC the most, as banks are unable to bring down their lending rates to protect their margins. HDFC doesn't need to maintain CRR, hence its incremental spreads have widened as incremental borrowing costs have declined while lending rates have remained stable.
  • Strong earnings visibility: Its core mortgage business is expected to grow at 25-30% over the next couple of years. In Q2FY2008, HDFC's margins expanded and the core operating performance was very strong (up 56% yoy). We expect the earnings before exceptionals to grow at 26% CAGR over FY2007-10E. 
  • Excellent asset quality despite strong asset growth: Despite the strong business growth the net NPA is almost negligible and the gross NPA is below 1%. Strong credit appraisal and risk monitoring techniques have helped HDFC to maintain a very healthy asset quality.
  • Valuations look attractive: We have valued the core mortgage business at 22x FY2010E EPS and if we adjust Rs954 for the value assigned by us to its subsidiaries from the CMP of Rs2,700, HDFC is quoting at 15.9x its FY2010E earnings and 3x FY2010E book value. We feel the valuations look attractive considering HDFC's consistent above 20% earnings growth record, the potential value unlocking from its various subsidiaries and investments, and the superior track record of its management. We initiate a Buy recommendation on the stock with a price target of Rs3,362.

Regards,
The Sharekhan Research Team

myaccount@sharekhan.com

 

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$$ DreamGains !! $$ FW: Sharekhan Post-Market Report dated November 19, 2007

 

 

From: The Sharekhan Research Team [mailto:marketwatch@research.sharekhan.com]
Sent: 19 November 2007 14:54
To: The Sharekhan Research Team
Subject: Sharekhan Post-Market Report dated November 19, 2007

 

 

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November 19, 2007

 

Index Performance

Index

Sensex

Nifty

Open

19,895.49

5,908.05

High

19,971.44

5,981.80

Low

19,583.97

5,893.80

Today's Cls

19,633.36

5,907.65

Prev Cls

19,698.36

5,906.85

Change

-65.00

0.80

% Change

-0.33

0.01

 

Market Indicators

Top Movers (Group A)

Company

Price 
(Rs)

%
chg

Gainers

Nirma

211.50

27.49

Apollo Tyres

43.90

19.62

Essel Propack

61.50

16.37

Vijaya Bank

84.00

13.98

Dabur India

125.70

13.86

Losers

Federal Bank

368.15

-22.41

HTMT Global

485.85

-5.82

Dredging Corporation

1,212.55

-4.91

Bongaigaon Refinery

100.45

-4.52

HPCL

302.30

-4.49

Market Statistics

-

BSE

NSE

Advances

2,182

910

Declines

644

259

Unchanged

29

7

Volume(Nos)

65.12cr

96.62cr

 Market Commentary 

Sensex pares early gains; down 65 points

The Sensex touched an intra-day high of 19,971 in early morning session but witnessed an erosion of its early gains and closed at 19,633.

The Sensex closed the session with a loss of 65 points.  

 

The market opened firm at 19,895 up 197 points and hit the day's high of 19,971 within few minutes of opening on selective buying in frontline stocks. However, the Sensex saw erosion of its early gains on the back of selling in banking, FMCG, and oil stocks. The market entered into negative territory by the afternoon. After gyrating over 387 points from the day's high, the Sensex finally closed the session with a loss of 65 points at 19,633, while the broader S&P CNX Nifty of the National Stock Exchange (NSE) closed marginally up at 5,908.

Movers & Shakers

  • L&T slipped despite the company led joint venture (JV) bagged order worth Rs275 crore tunneling order from Delhi Metro Rail Corporation (DMRC) for airport line.
  • RTS Power gained on securing new orders worth Rs53 crore for the supply of transformers, cables, and conductors.
  • Bank of Baroda moved up on signing a MoU with Andhra Bank and Legal & General Group Plc, UK to form a JV for life Insurance business.


The broader market, however, continued to remain in the green. Of the 2,855 stocks traded on the Bombay Stock Exchange (BSE), 2,182 stocks advanced, 644 stocks declined and 29 stocks ended unchanged. Most of the sectoral indices ended in the green. The BSE CD was the biggest gainer and moved up by 3.04% at 5,360 followed by the BSE Auto index (up 2.45% at 5,413) and the BSE Realty index (up 2.15% at 10,748). However, the BSE bankex index, the BSE FMCG index, the BSE Oil & Gas index and the BSE PSU index closed in the red.

Among the laggards, ITC was down by 3.10% at Rs199, ICICI Bank declined by 2.67% at Rs1,187, HDFC Bank shed 1.89% at Rs1,655, Satyam Computer dropped 1.38% at Rs423, while, SBI, Reliance Industries, Bharti Airtel, Infosys, HDFC, and Wipro closed with marginal losses. However, select heavyweights attracted decent buying support. ACC surged 4.25% at Rs1,084, Cipla rose 3.43% at Rs187, Bajaj Auto jumped 3.32% at Rs2,426, Tata Steel added 2.32% at Rs863, M&M moved up by 2.19% at Rs749 and HLL gained 1.87% at Rs205.

Consumer durables stocks, however, were in the limelight. Videocon surged 8.99% at Rs438, Lloyd Electric jumped 4.46% at Rs176, Gitanjali Gems soared 3.36% at Rs388, Asian Star Company moved up by 2.46% at Rs1,322, Blue Star added 2.44% at Rs431 and Rajesh Exports closed with moderate gains.

Over 6.07 crore Tata Teleservices shares changed hands on the BSE followed by IFCI (2.30 crore shares), Essar Oil (1.48 crore shares), Reliance Petroleum (1.44 crore shares) and IDFC (1.11 crore shares).

Essar Oil topped the value list with a turnover of Rs312 crore on the BSE followed by Reliance Petroleum (Rs307 crore), Tata Teleservices (Rs293 crore), IDFC (Rs222 crore) and IFCI (Rs222 crore).

European Indices at 16:15 IST on 19-11-2007

Index

Level

Change (pts)

Change (%)

FTSE 100

6273.10

-18.10

-0.29

CAC 40 Index

5527.45

3.82

0.07

DAX Index

7605.51

-6.75

-0.09

Asian Indices at close on 19-11-2007

Index

Level

Change (pts)

Change (%)

Nikkei 225

15042.56

-112.05

-0.74

Hang Seng

27460.17

-154.26

-0.56

Kospi Index

1893.47

-32.73

-1.70

Straits Times

3411.72

-29.24

-0.85

Jakarta Composite Index

2646.81

-21.89

-0.82

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