Signage for Housing Development Finance Corporation Ltd. (Photographer: Vivek Prakash/Bloomberg)

Q3 Results: HDFC’s Profit Misses Estimates

Housing Development Finance Corporation Ltd. reported a lower-than-expected quarterly profit, as it had reported one-off gains in the year-ago period.

Net profit fell 60 percent on a yearly basis to Rs 2,114 crore in the three months ended December, India’s largest mortgage lender said in an exchange filing. That’s lower than the Rs 2,209-crore consensus estimate of analysts tracked by Bloomberg.

The mortgage lender had an exceptional gain of Rs 3,675 crore in the base quarter due to an initial public offering of HDFC Life. Net profit rose 17.3 percent adjusted for the one-time gain.

Also read: NBFCs, Housing Finance Firms Gain On Relaxation In Securitisation Rules

Net interest income, however, rose 17 percent to Rs 3,191 crore, compared with the Rs 2,905-crore estimate. Total revenue jumped 20 percent year-on-year to Rs 10,450 crore in the October-December period.

Analsyts found HDFC’s results largely in line with expectations. “It’s a decent set of numbers,” Indiabulls Ventures’ analyst Foram Parek told BloombergQuint.

“The entire housing finance companies... sector has been caught up with this kind of a bad performance and if you compare [HDFC Ltd.’s results] with other housing finance companies, I think HDFC has posted very good... numbers,” Parekh said.

The housing financier’s Vice Chairman and Executive Chief Keki Mistry said that for HDFC, the December ending quarter was just another normal quarter. While liquidity was tight in September and October, he said, the non-bank lender did not face much of a concern.

Structural demand for housing in India will always remain strong.
Keki Mistry, VC and CEO, HDFC Ltd.

Mistry said low penetration level for mortgages, larger chunk of population falling below the average age of a homebuyer, and the government’s thrust on housing would continue aid demand.

HDFC’s total loan book rose 9 percent year-on-year to Rs 3,85,520 crore. Individual loans grew 17 percent to Rs 6,959 crore, while non-individual loans grew 9 percent during the October-December quarter.

Provisions on expected credit loss dropped to Rs 116 crore compared with Rs 1,765 crore a year ago. This makes HDFC is a “good buy” at the current price, Parekh said.

Net interest margin grew 3.5 percent versus 3.3 percent a year-ago.

HDFC said its board has approved the appointment of McKinsey and Company’s Ireena Vittal as an independent director for five years, beginning Jan. 30. It also approved the proposal to issue up to Rs 45,000 crore of debentures.

Shares of HDFC were trading down 1 percent to Rs 1,898.10 apiece on Wednesday morning.

Also read: Housing Finance Firms Banking On High Prepayment Rates For LAP, Developer Loans: Moody’s 

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