Frankly, as a long term investor you must have HDFC in your portfolio. For a long time, HDFC has managed to maintain smart growth, low cost of funds and low NPAs. If you look at the latest June quarter results, it has reported 46% growth in net profits to Rs.3203 crore for the June quarter. Of course, this was largely boosted by a special extraordinary profit of Rs.1895 crore that HDFC received as profit from the sale of Gruh Finance, which it sold out during the current quarter. Total revenues were up by 30% at Rs.12,900 crore. Its net interest margins (NIM) remained static at closer to 3.3% which is best in class in case of housing finance companies.

The reason I am asking you to hold is that many smaller housing finance companies are likely to go out of business as the liquidity gets tighter and the cost of funds goes higher. This will give a much bigger ready market for HDFC. Also the focus on low cost housing is likely to be beneficial to the company. Certainly, you must hold HDFC as part of your core portfolio.