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HDFC: High Provisioning Drags Down Earnings Growth - Views on News from Equitymaster
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HDFC: High Provisioning Drags Down Earnings Growth
Feb 7, 2017

HDFC declared its results for the third quarter (3QFY17). The institution has reported 18.4% YoY growth in net interest income while net profits have grown by 11.9% YoY during 3QFY17. Here is our analysis of the results.

Standalone financial performance snapshot
(Rs m) 3QFY16 3QFY17 Change 9mFY16 9mFY17 Change
Interest Income 71,847 80,561 12.1% 212,632 233,438 9.8%
Interest Expense 49,302 53,873 9.3% 148,164 160,307 8.2%
Net Interest Income 22,544 26,688 18.4% 64,468 73,131 13.4%
Net interest margins 3.85% 3.95% 3.85% 3.95%
Other Income 2,042 1,936 -5.2% 7,794 13,987 79.5%
Other Expense 2,001 2,142 7.0% 5,902 6,464 9.5%
Provisions and contingencies 680 1,170 72.1% 1,700 2,770 62.9%
Profit before tax 21,905 25,312 15.6% 64,661 77,884 20.5%
Tax 6,700 8,300 23.9% 19,800 23,900 20.7%
Effective tax rate 30.6% 32.8% 30.6% 30.7%
Deferred Tax Liability 0.0 0.0 0.0
Profit after tax/ (loss) 15,205 17,012 11.9% 44,861 53,984 20.3%
Net profit margin (%) 21.2% 21.1% 21.1% 23.1%
No. of shares (m) 1585.1
Book value per share (Rs)* 244.0
P/BV (x) 5.7

* (Standalone book value as on 31st Dec 2016)

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