Housing Development Finance Corporation
Cluster: Evergreen
Recommendation: Buy
Price target: Rs3,362
Current market price: Rs2,919
Value unlocking to continue
Key points
Cluster: Evergreen
Recommendation: Buy
Price target: Rs3,362
Current market price: Rs2,919
Value unlocking to continue
Key points
*Housing Development Finance Corporation (HDFC) has agreed to sell 8.1 crore equity shares representing 7.2% of the paid-up equity capital of HDFC Standard Life Insurance Company (HDFC SLIC) to Standard Life of the UK. Consequent to the sale, Standard Life would hold 26% stake in HDFC SLIC, while HDFC will hold around 72.4% stake and the employees of HDFC and other group companies would hold the remaining 1.6% stake.
*The main highlight of the deal has been that both the parties, HDFC and Standard Life, have officially agreed that any further stake sale in HDFC SLIC between the two entities would be at a fair market value. This is a big positive for HDFC as current pricing methodology restricted HDFC from realising current market valuation for its stake sales in its insurance venture so far.
*HDFC SLIC has also unveiled plans of coming out with an initial public offer (IPO) before 2009 end, which we feel would further help HDFC in unlocking value in its subsidiaries.
