Teji Mandi: Three things investors should know on January 5, 2021
Teji Mandi

HDFC's Q3 business update:

HDFC Limited has hit a new height after it presented a strong business update. HDFC's individual loan disbursements rose 26% in the third quarter ending December 2020. The disbursements were at 86% of the level in the same quarter last year.

The individual loan business continued to see improvements. Individual loans sold in the preceding 12 months amounted to Rs 16,956 crore.

HDFC sold down Rs 7,100 crore worth of loans in the quarter v/s Rs 4,300 crore YoY. Profit from the sale of stake sale in HDFC Life was Rs 157 crore. HDFC’s stake in HDFC Life Insurance now stands at 49.99%, within the mandated regulatory limit of 50%.

Strong business update is a reassurance for the investors in HDFC's growth capabilities. It showcases HDFC’s ability to gain profitable market share from the competitors.

HDFC has also announced to raise Rs 45,000 crore on a private placement basis. It will further fuel the loan disbursal activities in the coming quarters.

UK orders stringent lockdown:

UK has imposed a fresh lockdown until at least mid-February to battle the growing cases of the new variant of Covid.

Addressing the country, Prime Minister Boris Johnson confirmed a complete shutdown of schools and businesses. The lockdown norms are similar to the very first nationwide lockdown back in March 2020.

The world is taking strong precautionary norms to stop the spreading of new Covid strain. India has also imposed a ban on flights from the UK. However, India couldn't stop the virus from entering its borders. So far, 38 cases of the new strain are discovered here. which is a worrying development.

For aviation, skies are yet not clear:

The Indian aviation industry will continue to incur large losses even in 2021-22, as per the CAPA India report.

It believes that airlines will have to carry huge costs to maintain their grounded fleet. Brent Crude has surged again to $50 per barrel while the weakness in rupee will continue to add to the cost. The closure would continue on international routes, adding to the losses.

Looking at the piling losses, several airlines are struggling to continue their operations. International flights are showing no signs of resumption. At the same time, the domestic market has also lost a sizable chunk of the business travelers.

We expect IndiGo to emerge as the strongest aviation player. Its robust balance sheet with free cash flow makes it the most resilient airline. It will be a cushion for IndiGo to survive and even consolidate its leadership position in the coming future.

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