DG - Wednesday Telefolio : HDFC

 

 

Housing Development Finance Corporation

Worth taking shelter

While the earnings growth in core housing finance business is expected to increase, value of its investments in banking, insurance and asset management businesses will gallop in the expected favourable environment

Buy	Housing Development Finance Corporation
BSE Code	500010
NSE Code	HDFC
Bloomberg	HDFC@IN
Reuter	HDFC.BO
52-week High/Low	Rs 3257/ Rs 1397
Current Price	Rs 2842 (as on 16th January 2008)

Housing Development Finance Corporation (HDFC), country�s premier housing finance company, is one of the few companies, which have been consistently growing at CAGR of 20% and is expected to improve this growth rate in future

Encouraging industry prospects

The industry continues to witness high demand largely driven by improved affordability on the back of rising disposable income, lower interest rates (compared to high levels few years ago), tax incentives (interest and principal repayments deductible), increasing urbanization, favourable demographics and rapid rise in new households

Moreover at present, Indian housing finance industry mainly caters to the organized or the employed sector and traditionally confined to metros and other big cities. The industry has to go a long way to cover vast populace of semi urban and rural towns that live outside the formal sector.

Further property prices are not likely to impact the housing demand, since in India people do not usually buy a house for investment, they usually buy a house for self-occupation. So when people are buying a house for self-occupation, what they are looking at is whether they can afford to buy a house or not. Hence whether the price goes up a little later on or goes down a little is not going to matter much.

HDFC is the most competitive and efficient player

HDFC has always been dynamic as well as quality-conscious with respect to resource mobilisation as well as its lending programme. It enjoys one of the most coveted reputation of having zero NPAs for past many years.

HDFC�s distribution network spans 243 outlets that include 49 offices of HDFC�s distribution company, Home Loan Services India Private Limited (HLSIL). In addition, HDFC covers over 90 locations through its outreach programmes. HDFC�s marketing efforts continue to be concentrated on developing a stronger distribution network. Home loans are also marketed through HLSIL, HDFC Bank Limited and other third party Direct Selling Agents (DSA). To cater to non-resident Indians, HDFC has an office in London and Dubai and service associates in Kuwait, Oman, Qatar, Sharjah, Abu Dhabi, Al Khobar, Jeddah and Riyadh in Saudi Arabia.

Encouraging financial performance

For the six months ended Sep�07, HDFC reported 40% increase in Income from operations at Rs 3713.79 crore. Gross profit increased by 33% to Rs 1095.15 crore. While the PBT before exceptional item stood at Rs 1087.45 crore, up by 34%, the half-year reported exceptional income of Rs 313.25 crore (as compared to Rs. 32.98 crore) on account of profit on sale of investment in an associate company, Intelenet Global Services Private Limited. After providing Rs. 381.50 crore for taxes, the profit after tax increased by 53% to Rs 1019.20 crore.

As at September 30, 2007, the total assets of HDFC stood at Rs. 72,665 crore as against Rs. 56,496 crore as at September 30, 2006 � an increase of 29%.

Loan approvals during the six-month period ending September 30, 2007 amounted to Rs. 18,948 crore as compared to Rs. 14,729 crore, in the corresponding period last year, representing a growth of 29%. Loan disbursements during the period ending September 30, 2007 amounted to Rs.14,275 crore as compared to Rs.11,280 crore in the corresponding period last year, representing an increase of 27%.

The loan portfolio (including loans outstanding and investments in debentures and inter-corporate deposits for financing real estate related projects) as at September 30, 2007 amounted to Rs. 63,446 crore as against Rs. 51,332 crore as at September 30, 2006, representing an increase of 24%.

Comfortable capital adequacy ratio

HDFC�s capital adequacy ratio stood at 17% of the risk weighted assets, as against the minimum requirement of 12%. Tier 1 capital adequacy was 12.4% as against a minimum requirement of 6%.

Strategic investments will add to the core business growth

HDFC has interests in banking, insurance and asset management.

All the subsidiaries are currently doing extremely well.

HDFC Standard Life

Its life insurance company (HDFC Standard Life) is a tie up with Standard Life Assurance Company, U.K. HDFC holds 74% of the equity of HDFC-SL.

The company earned total premium income of Rs 2856 crore for FY 07 (against Rs 1570 crore). Its first half growth in total premium is 79%.

Funds under management of group new business increased by 109% as at September 30, 2007 as against the previous year.

It has market share of 8.3% (private sector) and 3.7% (overall) in terms of Effective Premium in H1 08.

HDFC Asset management

HDFC Asset management has Tie-up with Standard Life Investments (SLI). HDFC holds 60% of HDFC Asset Management.

The company earned a Profit After Tax of Rs 67.50 crore for FY07 and paid a dividend of 100% for FY07 to equity shareholders.

Total assets under management as at September 30, 2007, stood at Rs 52800 crore, which is inclusive of portfolio management and advisory services of Rs 11400 crore.

HDFC Property fund

HDFC Launched in March 2005 its first property fund.

Its first scheme was HDFC India Real Estate Fund having fund corpus of US $ 250 million. It was a domestic 7-year close-ended fund managed by Funds managed by HDFC Venture Capital

General Insurance

In October 2007, HDFC and ERGO (Germany) entered into shareholders� agreement whereby ERGO will acquire 26% of HDFC General Insurance Company Ltd. The company offers Auto Insurance, Home Insurance, Group Accident Insurance, Group Travel Insurance, Commercial Insurance, which includes Fire and Marine and Specialty Insurance Products like Directors & Officers Liability.

The company had Achieved Gross Written Premium of Rs 197 crore.

HDFC Bank

HDFC also has 24% equity stake in HDFC Bank, which has one of the best technology and finest quality of assets with one of the best consistently high growth rates.

Investments

HDFC also has lot of investments in many listed companies like IDFC, Gruh Finance, Hindustan Oil Exploration, Siemens etc which are worth Rs 1800 crore at current market rates. Additionally its investments in HDFC Bank is worth Rs 6900 crore at current market rates.

Outlook

HDFC�s core business profitability numbers are on an upswing due to less intense competition from banks (due to higher reserve requirements increasing their costs and regulatory discouragement towards lending to realestate/retail sector) and some easing in funding costs. The insurance company is growing remarkably faster and the bank�s growth also shows signs of acceleration.

Reasonable valuation

HDFC is expected to report standalone adjusted EPS of Rs 64.8 for FY 2008 and Rs 83.1 for FY 2009. At Rs 2842, P/E is just 34 times its FY 2009 standalone adjusted earnings, which is reasonable in view of the expected sustained growth of 25% in earnings and expected continued growth in value of its investment in banking, life insurance, general insurance, property fund and asset management businesses (whose combined value can be Rs 750-Rs 1000 per HDFC�s share).

HDFC: Financials

 

	0503(12)	0603(12)	0703(12)	0803 (12P)	0903 (12P)
Income from operations	3400.6	4265.54	5842.52	7887.40	10411.37
Other Inc.	9.48	12.85	20.76	14.00	16.00
Total Inc.	3410.08	4278.39	5863.28	7901.40	10427.37
Interest Exp.	1959.43	2491.13	3666.85	5096.92	6778.91
Other exp.	175.17	211.27	244.17	285.68	331.39
Gross profit	1275.48	1575.99	1952.26	2518.80	3317.08
Dep.	18.69	18.69	17.46	17.60	18.50
PBT before EO	1256.79	1557.30	1934.80	2501.20	3298.58
EO	0.00	0.00	32.98	313.25	0.00
PBT	1256.79	1557.30	1967.78	2814.45	3298.58
Taxation	220.2	300.00	397.40	759.90	956.59
Net profit	1036.59	1257.30	1570.38	2054.55	2341.99
EPS*(Rs)	36.8	44.6	54.8	64.8	83.1
* Annualised on current equity of Rs 281.94 crore. Face Value: Rs 10 Figures in Rs crore EO: Extraordinary items *EPS is after excluding EO and relevant tax (P): Projections Source: Capitaline Corporate Databases

 

HDFC: Results

 

	0709(3)	0609(3)	Var. (%)	0709(6)	0609(6)	Var. (%)	0703(12)	0603(12)	Var. (%)
Income from operations	1888.60	1446.69	31	3713.79	2659.43	40	5842.52	4265.54	37
Other Inc.	3.90	9.54	-59	7.34	12.35	-41	20.76	12.85	62
Total Inc.	1892.50	1456.23	30	3721.13	2671.78	39	5863.28	4278.39	37
Interest Exp.	1223.75	913.59	34	2467.13	1715.00	44	3666.85	2491.13	47
Other exp.	82.31	68.64	20	158.85	135.31	17	244.17	211.27	16
Gross profit	586.44	474.00	24	1095.15	821.47	33	1952.26	1575.99	24
Dep.	4.00	3.89	3	7.70	7.61	1	17.46	18.69	-7
PBT before EO	582.44	470.11	24	1087.45	813.86	34	1934.80	1557.30	24
EO	313.25	0.00	100	313.25	32.98	850	32.98	0.00	100
PBT	895.69	470.11	91	1400.70	846.84	65	1967.78	1557.30	26
Taxation	249.30	102.09	144	381.50	182.00	110	397.40	300.00	32
Net profit	646.39	368.02	76	1019.20	664.84	53	1570.38	1257.30	25
EPS*(Rs)	59.6	52.2		56.1	45.3		54.8	44.6
* Annualised on current equity of Rs 281.94 crore. Face Value: Rs 10 Figures in Rs crore Source: Capitaline Corporate Databases

 

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DG - FW: Sharekhan Post-Market Report dated January 16, 2008

 

 

From: The Sharekhan Research Team [mailto:marketwatch@research.sharekhan.com]
Sent: 16 January 2008 19:28
To: The Sharekhan Research Team
Subject: Sharekhan Post-Market Report dated January 16, 2008

 

Sharekhan's daily newsletter Visit us at www.sharekhan.com January 16, 2008   Index Performance Index Sensex Nifty Open 20,079.89 6,065.00 High 20,079.89 6,065.00 Low 19,513.25 5,825.75 Today's Cls 19,868.11 5,935.75 Prev Cls 20,251.09 6,074.25 Change -382.98 -138.50 % Change -1.89 -2.28   Market Indicators Top Movers (Group A) Company Price  (Rs) % chg Gainers Indian Bank 232.75 5.99 Mphasis 290.25 5.41 RCF 123.70 4.96 Apollo Tyres 54.30 4.52 IDBI 172.20 4.05 Losers Omaxe 439.65 -9.49 Lanco Infra 728.25 -7.99 Sterlite Industries 926.25 -6.21 HDFC Bank 1,675.85 -6.12 Reliance Comm 731.65 -5.89 Market Statistics - BSE NSE Advances 615 195 Declines 2,207 1,000 Unchanged 18 9 Volume(Nos) 37.85cr 62.16cr  Market Commentary  Sensex slips 383 points Weakness in global indices took a heavy toll on the market however, late buying helped the Sensex to shed only 1.89% at close. Weak global cues and unwinding of positions by investors triggered a 700-point fall for the Sensex today.     The market mirrored the Asian markets. Hang Seng tumbled 5.37% or 1,387 points, Nikkei fell 3.35% or 468 points and Jakarta Composite slipped 5.04% or 138 points. The Sensex resumed on a bearish note at 20,080, which was 172 points below its last close of 20,251 and accumulated losses of 738 points by afternoon on across-the-board selling pressure to touch the day's low of 19,513. However, short covering in index pivotal stocks saw the Sensex erase losses of 355 points towards close and end the session at 19,868, down 383 points. The Nifty declined by 2.28% and was down 139 points to close at 5,936. The market breadth was heavily tilted in favour of the losers as 2,207 stocks declined, 615 stocks advanced and 18 stocks remained unchanged on the Bombay Stock Exchange(BSE). Most of the sectoral indices were battered on the BSE. The BSE Realty index lost heavily and dropped 4.44% followed by the BSE Power index (down 3.67%), the BSE Metal index (down 3.17%), the BSE CG index (down 2.47%), the BSE PSU index (down 2.26%) and the BSE FMCG index (down 2.05%). The second-rung benchmark indices the BSE mid-cap index and the BSE small-cap index also slipped around 2% each. Out of the 30 Sensex stocks only six stocks managed to end in the green. Among the major losers HDFC Bank tanked 6.12% at Rs1,676. Reliance Communication slumped by 5.89% at Rs732, NTPC shed 5.55% at Rs259, BHEL crumbled by 4.42% at Rs2,309, Reliance Energy dropped 4.14% at Rs2,267 and DLF slipped by 4.12% at Rs1,128. Other front-line stocks also declined by around 1-3% each. However, ICICI Bank bucked the downtrend and advanced by 1.32% at Rs1,369, while Bharti Airtel, TCS, M&M, Cipla and SBI inched up marginally. Over 2.84 crore RNRL shares changed hands on the BSE followed by Ispat Industries (1.35 crore shares), Reliance Petroleum (1.16 crore shares), IFCI (98.40 lakh shares) and Cybermate Infotek (92.20 lakh shares). Valuewise, RNRL registered a turnover of Rs600 crore on the BSE followed by Reliance Industries (Rs303 crore), Reliance Energy (Rs285 crore), Reliance Petroleum (Rs253 crore) and Reliance Communication (Rs233 crore). European Indices at 16:30 IST on 16-01-2008 Index Level Change (pts) Change (%) FTSE 100 5956.10 -69.50 -1.15 CAC 40 Index 5204.75 -46.07 -0.88 Dax Index 7479.52 -86.86 -1.15 Asian Indices at close on 16-01-2008 Index Level Change (pts) Change (%) Nikkei 13504.51 -468.12 -3.35 Hang Seng 24450.86 -1386.93 -5.37 Kospi Composite 1704.97 -41.98 -2.40 Straits Times 3058.49 -96.09 -3.05 Jakarta Composite 2592.31 -137.72 -5.04 To know more about our products and services, click here. “This document has been prepared by Sharekhan Ltd. This Document is subject to changes without prior notice and is intended only for the person or entity to which it is addressed to and may contain confidential and/or privileged material and is not for any type of circulation. Any review, retransmission, or any other use is prohibited. Kindly note that this document does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. SHAREKHAN will not treat recipients as customers by virtue of their receiving this report. The information contained herein is from publicly available data or other sources believed to be reliable. While we would endeavour to update the information herein on reasonable basis, SHAREKHAN, its subsidiaries and associated companies, their directors and employees (“SHAREKHAN and affiliates”) are under no obligation to update or keep the information current. Also, there may be regulatory, compliance, or other reasons that may prevent SHAREKHAN and affiliates from doing so. We do not represent that information contained herein is accurate or complete and it should not be relied upon as such. This document is prepared for assistance only and is not intended to be and must not alone betaken as the basis for an investment decision. The user assumes the entire risk of any use made of this information. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. We do not undertake to advise you as to any change of our views. 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DG - FW: PowerYourTrade Trading Calls

 

 

From: mailer9-bounces@mailman3.moneycontrol.com [mailto:mailer9-bounces@mailman3.moneycontrol.com] On Behalf Of PowerYourTrade
Sent: 16 January 2008 12:48
To: alerts@poweryourtrade.com
Subject: PowerYourTrade Trading Calls

 

Trading Calls for 16th January 2008

Rajat K Bose Sell NTPC with a stop loss above Rs 281, for targets of Rs 262 and Rs 259. This is a day trading recommedation Sell NTPC with a stop loss above Rs 281, for targets of Rs 262 and Rs 259. This is a day trading recommedation Note: Either on the long side or on the short side if at any moment a counter is not moving beyond an initial or interim target to the final target book profits. Once initial target is crossed, you can use that as your trailing stop-loss level. Notes: ·  All prices relate to the NSE, unless otherwise mentioned. ·  Calls are based on the previous trading day's price activity. ·  The call is valid for the next trading session only unless otherwise mentioned. ·  Stop-loss levels are given so that there is a level below/above, which the market will tell us that the call has gone wrong. Stop-loss is an essential risk control mechanism; it should always be there. ·  Trading involves considerable risk. Trade at your own risk to the extent you are comfortable. The analyst shall not be responsible for any losses incurred for acting on these recommendations. Disclosure:The analyst and his family do not have any trades in the securities recommended above at the time of giving this recommendation. His newsletter clients have been recommended the same along with other picks. Traders are requested to adhere to the stop losses very strictly; they are given to be implemented, not ignored. Do not chase a security and take a position where you would be uncomfortable with the stop-loss level. Take a position only when you feel that the risk-reward ratio looks comfortable and favourable for the trade.   Mathew Easow Buy Himat Singka Seide with a stop loss of Rs 101 for short term target of Rs 140 Buy Himat Singka Seide with a stop loss of Rs 101 for short term target of Rs 140 Disclaimer: - At the time of writing this article, I,my family members and my group companies do not have any position in HIMAT SINGKA SEIDE LTD. This stock has been recommended to our clients and they may be holding long or short positions in this stock. Mathew Easow and matheweasow.com gives an unbiased and competent picture of trading & investment opportunities and it does that to the best of its abilities. The information contained herein is not a complete analysis of every material fact representing the company, industry or security. The views expressed may change. However, prices can move up as well as down due to a number of factors, all of which are impossible for anyone to foresee. THEREFORE, Mathew Easow and matheweasow.com cannot accept any responsibility (or liability) for the accuracy of the above contents and also any investment decision or trading decision taken by readers and clients on the basis of information contained herein. Short Term Target Means – Approximately 3 –4 weeks. If the target is not met within 3-4 weeks then please exit the positions. Please follow stop losses very strictly and do not take positions where one is uncomfortable with the stop loss level. Above all Buy or Sell the stock only when the risk - reward ratio vis–a–vis the stop loss is favourable for taking a position. Individual traders /investors should book profit depending on their risk bearing capacity and need not wait for the targets.

 

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DG - FW: PowerYourTrade Midday Trading Calls

 

 

From: mailer9-bounces@mailman3.moneycontrol.com [mailto:mailer9-bounces@mailman3.moneycontrol.com] On Behalf Of PowerYourTrade
Sent: 16 January 2008 13:58
To: alerts@poweryourtrade.com
Subject: PowerYourTrade Midday Trading Calls

 

Midday Trading Calls for 16th January 2008   Hitendra Vasudeo, stockmechanics.com Sell Reliance Petro below Rs 212. Stop Loss of Rs 217, target of Rs 205-Rs 192. (Intra-day/Positional Call) Sell Reliance Energy below Rs 2250. Stop Loss of Rs 2282, target of Rs 2202-Rs 2122. (Intra-day/Positional Call) Sell Reliance Communication below Rs 738. Stop Loss of Rs 746, target of Rs 713-Rs 671. (Intra-day/Positional Call)   Disclaimer :Intra-day call are of high risk as they are based on instant market movement. If the money and risk is not managed correctly, then traders and short term investors can land up in losses. We are not responsible for any losses that can occur due to volatility and stop loss violation. I do not have any personal positions any time on the recommendation made for the intra-day calls. However, it is possible that our Live Market Calls subscriber's could have positions and trading positions without our knowlege and consent. We also dont have any control on our client reverse positions if they have created against our recommendtion. Individual traders, implementers of the trading call are doing it at their own risk. We also dont have any control on our subscriber's positions. Traders are advised to check their cost in long and short trades and kee p taking profits irrespective of our targets. What matter is trading profits therefore check cost and keep taking profits.

 

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