Lehman Upgrades HDFC to Overweight

Struggling American FII, Lehman Brothers Equity Research has upgraded Asia’s best housing finance company HDFC to Overweight from Equal weight. Lehman in the note said, Because of its highly stable business model, HDFC has historically been a good opportunity in times of heightened risk perception. This will continue to be the case this time as well. However, in the past two weeks, the stock has corrected by 13%, which we believe provides an attractive entry opportunity.

The stock has historically been an outperformer during periods of market corrections. The stock’s premium to the market is now at historical lows, providing an attractive entry opportunity. HDFC will continue to report 25% growth in disbursements in spite of current weakness in the mortgage market.

HDFC is expected to report an EPS of Rs 72.9 for FY09 and Rs 91 for F2010. Lehman has set a target price of Rs 2,900.