HDFC edged up 1% to Rs 405.05 after a block deal on the counter in which FIIs were the buyers. The stock hit a high of Rs 406 earlier, a lifetime high.

A total of 54,000 HDFC shares were registered as volumes on BSE. From Rs 299.60 on 25 April 2003, the stock has surged 35% in less than two months to the current Rss 405.05. The stock, in fact, has witnessed a continued upward trend on the bourses since mid-1999 despite some intermittent corrections.

The latest trigger for the stock has come following a block deal whereby FIIs acquired additional stake in the company . Yet another trigger for the stock has come from the International Finance Corporation (a private sector funding arm of the World Bank)'s having approved loans amounting to $200 million to HDFC. The IFC loan is seen as a key for HDFC in funding its proposed plans to focus on the middle- and lower-income segment with attractive housing schemes.

Analysts also hail the low cost funds that the housing finanace major has been able to garner. Recently, HDFC allotted secured non-convertible debentures (NCDs) of Rs 1 million each, aggregating Rs 250 crore on a private placement basis. The interest on these NCDs is 5.82%, payable annually, and these will be redeemed at par at the end of five years (on 10 June 2008).

Around end-May 2003, FIIs acquired an additional 2.5% stake in HDFC through a block deal of 63 lakh shares. The said stake (2.58% of the paid-up capital of HDFC) was sold by Warburg Pincus LLC. Following the above sale, the total shareholding of the affiliates of Warburg Pincus LLC in HDFC stands reduced to 6.22%.

Strong demand for housing loans has led to a sustained growth in disbursals and earnings growth at the housing finance major over the years.

For Q4 ended 31 March 2003, HDFC recorded a 15.85% growth in net profit to Rs 239.19 crore, compared to Rs 206.45 crore in the corresponding period of the previous year. Total income increased by 9% to Rs 792.27 crore from Rs 726.54 crore in MQ 2002.

For FY 2002-03, HDFC registered a 19% rise in net profit to Rs 690.29 crore (Rs 580.01 crore) on a 10.2% increase in total income to Rs 2,975.62 crore (Rs 2,700.15 crore). On a consolidated basis, for the full year ended 31 March 2003, the company recorded a net profit of Rs 747.48 crore (Rs 626.73 crore) on a total income of Rs 3,092.16 crore (Rs 2,818.65 crore). The company also declared a dividend of Rs 11 per share.

Through active liability management, HDFC has been able to achieve a cost of borrowing which is significantly lower when compared to other companies in both international and domestic markets. HDFC reduced its retail deposit rates by 0.50% on varying maturities on 29 January 2003. This was the fifth time during the current financial year that HDFC slashed deposit rates. It effected a 325-350 basis points reduction in its deposit rates since April 2001 and a reduction of 175-215 basis points since April 2002.