Hold HDFC, target Rs 2171: Emkay Global Financial Services

Emkay Global Financial Services has a hold call on Housing Development Finance Corporation Ltd. with a target price of Rs 2171. The current market price of Housing Development Finance Corporation Ltd. is Rs 1834.15. Time period given by the brokerage is a year when Housing Development Finance Corporation Ltd. price can reach defined target. Housing Development Finance Corporation Ltd., incorporated in 1977, is a largecap company with a market cap of Rs 307512.35 crore.

Investment rationale by Emkay
Given the asset quality challenges and slowdown in demand for corporate credit, Housing Finance has been the obvious choice for banks to fall back on during the easing interest rate scenario. However, during a tightening monetary cycle, pure HFCs are the most vulnerable compared to other NBFCs. HDFC is already facing pressure in the form of higher pre-payments and margin compressions. We remain conservative towards HFCs considering the sluggish housing demand and rising exposure to Developer Finance. We maintain HOLD with a TP of Rs2,171, corresponding to ~6.0x P/Adj book on FY20E.