HDFC, Indiaís number one housing finance company is in the limelight since the past few days. The stock has appreciated by more than 9% in the past 15 days. The rally in the stock was fueled by FII increasing their stake in the company to 38%.
After touching a high of Rs 600, the stock retreated sharply to the current level of Rs 560. The selling pressure was on the back of RBIís recent announcement that foreign funds are required to take its permission to increase the stake further.
Although, the stock was rising purely on the technicals, HDFC is a fundamentally strong company. It has consistently maintained its performance in the last ten years. Its revenues increased at a compounded annual growth rate of 25% while profits showed a faster growth rate of 34% in the last ten years. Apart from its core business housing finance, the company has also ventured into other emerging growth areas to improve the growth ratios.
Year End March 31
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HDFC has declared a 22% rise in revenues and a growth 20% in profits for the first half ended September 2000. We are expecting the company to maintain a double-digit growth both in topline and profits in the second half of the current year. However, its profit margins are expected to decline marginally with the increasing competition and pressure on interest spread.
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