HDFC has reported lower than expected growth in income from operations for the third quarter ended December 2001. Its earnings however, showed a strong growth of 22% on the back of lower depreciation charge.
Income from Operations
Operating Profit Margin (%)
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares (eoy) (m)
Diluted Earnings per share*
P/E (at current price)
In this competitive environment also, HDFC's operating margins improved by 100 basis points. Its cost to income ratio however, increased to 16% in 3QFY02 from 15% in the comparable previous quarter. The company's gross mobilization of retail deposits increased by 42% in the first half of the current year. Retail deposits account for 30% of total deposits mobilized by the company. This has helped the company in reducing its average cost of deposits and maintaining higher margins.
HDFC's disbursements and approvals witnessed a healthy growth of 30% and 29% in the first nine months of the current fiscal. The growth was partly fueled by the amalgamation of Home Trust Housing Finance Company. Since the company was amalgamated with effect from October 1, 2000, previous year figures are not strictly comparable. Approvals and disbursements for individual loans were also higher by about 45%. Increased tax incentives and stagnant property prices fueled the growth. HDFC's capital adequacy ratio of 13% will help the company in its business expansion.
HDFC's revenue growth was supported by a 23% rise in interest income and 20% growth in lease rentals. Also, during the first half the company received Rs 514 m from sale of shares in HDFC Asset Management Company to Standard Life. Excluding this revenue stream, income from operations of the company grew by just 12% during the first nine months. The decline in income from capital market related activities (dividend and investment income) trimmed the topline growth.
Interest on loans
Fees and other charges
Lease rental income
Income from investments
Profit on sale of investments
At the current market price of Rs 640, HDFC is trading at a P/E of 14x and Price/Book value ratio of 3x FY02 projected earnings. The company's full year profits are expected to grow by about 17%-19%.
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