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HDFC

HDFC hikes home loan rates for the first time since 2013

The news is positive for the stock and we believe the stock to trade with positive bias today. The increase in cost of funds has prompted the company to hike its PLR and also it has been the practice of HDFC Ltd to maintain its RPLR and pass on cost to customers in order to maintain its margins.

HDFC Ltd, India’s largest mortgage financier, has increased its benchmark prime lending rate (PLR) for the first time since December 2013, marking a shift in the interest rate trajectory. Mortgage rates for loans above Rs30 lakhs have been raised by up to 20bps, while those below Rs30 lakhs, which include priority sector loans, have been increased by 5bps. The increases are effective from April 1 2018. The benchmark PLR will now stand at 16.35% for HDFC from 16.15% before this hike and peak of 16.75% in December 2013. The news is positive for the stock and we believe the stock to trade with positive bias today. The increase in cost of funds has prompted the company to hike its PLR and also it has been the practice of HDFC Ltd to maintain its RPLR (Retail Prime Lending Rate) and pass on cost to customers in order to maintain its margins.

HDFC is well-poised to deliver strong earnings growth over the medium term driven by improved demand for retail mortgages, expanding distribution and strong cost competitiveness of the company. Strong loan growth (19% CAGR), improved outlook for margins and better operating efficiency are likely drive 19% EPS CAGR over FY17-20E.

Housing Development Finance Corporation Ltd ended at Rs1,836.60 up by Rs7 or 0.38% from its previous closing of Rs1,829.60 on the BSE.
The scrip opened at Rs1,830.05 and touched a high and low of Rs1,846.20 and Rs1,828.60 respectively.