HDFC Bank foreign shareholding hits the roof again as heavy buying propels it ahead of RIL

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Published: February 17, 2017 3:50:11 PM

Foreign shareholding in India’s largest private sector lender HDFC Bank again hit the overall upper limit of 74%, just within a day of RBI allowing FIIs to buy into the company in the open markets.

With the surge in the price, HDFC Bank has pipped Reliance Industries in terms of market capitalisation to become the second most valuable company in India. (Image: Reuters)With the surge in the price, HDFC Bank has pipped Reliance Industries in terms of market capitalisation to become the second most valuable company in India. (Image: Reuters)

Foreign shareholding in India’s largest private sector lender HDFC Bank again hit the overall upper limit of 74%, just within a day of RBI allowing FIIs (foreign institutional investors) to buy into the company in the open markets.

“The foreign shareholding by ADR/GDR/FIIs/FPIs/FDI/NRIs/PIOs in HDFC Bank Ltd has crossed the overall limit of 74% of its paid-up capital,” RBI said in notification, again restricting the purchase of company shares by foreign investors on stock exchanges.

HDFC Bank shares pared morning gains to provisionally end up 3.59% at Rs 1,375 on BSE, after gaining as much as 9.2% in the morning trade.

With the surge in the share price, HDFC Bank has pipped Reliance Industries in terms of market capitalisation to become the second most valuable company in India.

Earlier yesterday, the Reserve Bank of India allowed foreign institutional investors to buy HDFC Bank shares in open markets as the foreign holding in the private sector lender fell below the stipulated upper limit of 72% by FII/NRI/PIO investors. The foreign ownership under this category in HDFC Bank had dropped to 71.85%, making available 38 lakh shares comprising 0.15% of the capital that could be purchased by FIIs before hitting the roof again, research and brokerage firm Macquarie said in a note.

Macquarie and another brokerage firm CLSA had said that the gap made available today would be soon filled up again as foreign investors would rush to buy the company shares.

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Macquarie had said that the stock would move back into the caution limit soon, even as it maintained its ‘outperform’ rating on HDFC Bank with a target price of Rs 1,440.

However, the bank is expected to issue higher employee stock options in the next financial year (2017-18), diluting the foreign ownership, and again coming out of the restricted zone, Macquarie added. It also said that HDFC Bank is its top pick in the banking sector.

CLSA has also kept its ‘buy’ rating on HDFC Bank with a target price of Rs 1,460.

Investment advisory firm Dimension Corporate Financial Services’ CEO Ajay Srivastava had recommended the long-term investors to stay invested in HDFC Bank. “You will see correction coming through, but you stay put there because this is the long-term trajectory of the market,” Srivastava said in an interview to CNBC TV18. However, he added that he sees a correction in the next 2-3 sessions in the stock as it has been overplayed.

 

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