Q2 Results: HDFC’s Profit Beats Estimates On Higher Dividend Income
Net profit of the mortgage lender rose 60.5 percent year-on-year to Rs 3,961 crore in the quarter ended September.
Watch | Key takeaways from HDFC’s earnings.
Housing Development Finance Corporation Ltd.’s quarterly profit beat analysts’ estimates aided by higher dividend income.
Net profit rose 60.5 percent over last year to Rs 3,961 crore in the quarter ended September, India’s largest mortgage lender said in an exchange filing. Analysts tracked by Bloomberg had estimated a profit of Rs 3,265 crore.
The calculated net interest income, after adding surplus from the deployment of cash management schemes from mutual funds, rose 12 percent year-on-year to Rs 2,950 crore, with net interest margin at 3.3 percent in the three-month period. HDFC’s individual loan book rose by 17 percent.
The company’s dividend income stood at Rs 1,073.80 crore compared with Rs 5.77 crore a year ago. Profit on sale of investments rose 83 percent to Rs 1,627 crore. This was on account of selling 6.74 crore shares in Gruh Finance Ltd. during the quarter and the company’s holding in the associate firm is 38 percent currently, the filing said.
Large non-banking lenders such as HDFC—with strong balance sheets and prudent risk practices—will “emerge stronger” in the current macro environment over the next 12 months, Edelweiss said in a report prior to the earnings.
“What is impressive is NII (net interest income) continues to grow in double digits,” Gurmeet Chaddha, co-founder of Complete Circle Consultants, told BloombergQuint in an interview. “The company’s net worth has jumped 2.5-3 times since June 2016.” A positive outlook for the company’s investment in subsidiaries such as its asset management business, private lending and electronic depository services will push up the stock to 20-30 percent in the near term, he said.
Asset Quality
HDFC’s asset quality deteriorated marginally, with its gross non-performing assets ratio at 1.33 percent for the September quarter. That compares with 1.29 percent a year ago.
Other Highlights (YoY)
- Provisions at Rs 7,313 crore versus regulatory requirement of 3,559 crore.
- 97 percent of incremental loan growth in the quarter was due to individual loans.
- NPA on individual loan segment at 0.73 percent versus 0.72 percent. (QoQ)
- Disbursements grew 12 percent.
- Tax expense at Rs 568 crore versus Rs 1,022 crore.
Shares of the company rose 3.2 percent after the earnings announcement compared with a 0.40 percent advance in the Nifty Index.
