InvestorQ : I have been holding HDFC for a long time but am worried about the way the stock has fallen in the last 6 months? Should I hold on or exit the stock?
Arti Chavan made post

I have been holding HDFC for a long time but am worried about the way the stock has fallen in the last 6 months? Should I hold on or exit the stock?

Answer
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Rutuja Nigam answered.
3 weeks ago


Before you take a view on whether to hold on or exit the stock of HDFC, here is what you need to know about the company and the stock.

· It is not only the largest but also the most profitable home finance company in India with consistent profit margins and growth for over 40 years.

· The company holds important assets like HDFC Bank, HDFC Life, HDFC Mutual Fund, HDFC Ergo among others.

· As far as the stock of HDFC is concerned, it has surely been languishing for the last few months as the macro situation for home finance has not been too good.

· However, the tide may be finally changing for the company as there appears to be some good news on the growth front; both top line and bottom line.

· In fact, HDFC confirmed that its individual loans business had sharply improved in the second quarter ended Sep-20 to pre-COVID levels and results may be interesting.

· Loan disbursements in the Sep-20 quarter stood at 95% of pre-COVID levels. Individual loan approvals grew 9% YOY and the number of loan applications received was up 12%.

· A major area of worry, the recoveries have also improved to the best levels since the pandemic broke out and assures that gross and net NPAs should taper.

· As additional boost to your perception, loans under Moratorium-1 were 22.4% of the asset book as compared to 27% under Moratorium-1.

To answer your query, the fundamentals are strong and the properties owned by HDFC as stakes in subsidiaries are solid. It is time for you to hold on and even add more if required. The risk reward is extremely favorable.