The Telegraph
Since 1st March, 1999
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Block share deal turns market spotlight on HDFC

Mumbai, July 8: Housing Development Finance Corporation (HDFC) was in the spotlight on bourses today after 42 lakh shares changed hands in a block deal.

Market watchers could not hazard a guess on who could have been behind the transaction, in which the shares were sold at a price of Rs 400 for a sum of Rs 160 crore. The scrip closed at Rs 410.05 on BSE today, down Rs 4.70.

There is no official word on the sale, but a dealer affiliated to a premier Dalal Street broking house said it involved two foreign investors — foreign funds. This led to conjectures that it could even be an inter-group transfer.

The HDFC stock has long been coveted by FIIs, who now hold close to the maximum they are allowed to under rules framed by the government and Reserve Bank.

Given that, market sources say Standard Life could not have snapped up the shares. Already in control of 14.9 per cent, any fresh buying will take it above the permitted threshold.

SLAC Mauritius Holding, an affiliate of Standard Life, controls 14.53 per cent of HDFC’s equity. Emerging Markets Growth Fund owns 8.56 per cent. FIIs, along with foreign associates, control around 74 per cent of the equity — the ceiling for foreign capital.

The markets are taking a fresh look at HDFC, along with its rivals, as rising demand for home loans boosts their growth rate and promises big gains for shareholders. LIC Home Finance, CanFin Homes, GIC Housing, besides banks like SBI and ICICI Bank, have clocked sharp growth rates in this segment in recent years.

During the previous fiscal, HDFC declared a bonus issue in the ratio of 1:1 which, together with a dividend of Rs 11 per share on the firm’s enhanced paid-up capital, made the stock a top draw in the market.

The company had considered a proposal for a buyback up to 5 per cent of its paid-up equity capital. But current regulations do now allow a buyback when the equity ratio overshoots the maximum permissible 2:1.

HDFC made more money in 2002-03, despite having faced tough competition. Loan approvals were pegged at Rs 11,731.57 crore compared with Rs 9041.25 crore in the previous fiscal — a rise of 30 per cent. Cumulative loan approvals and disbursements were Rs 51,867 crore and Rs 43,520 crore respectively on March 31, 2003.

However, competition and the low interest rate regime prompted borrowers to repay Rs 4,961.36 crore in principal, and opt for redemptions ahead of schedule.

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