HDFC: FY01 profits up 18% - Views on News from Equitymaster

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HDFC: FY01 profits up 18%

May 8, 2001

HDFC, has reported a 17.9% jump in profits for the year ended March '01. The company's topline however, grew at a slower pace of 18%.

(Rs m)FY00FY01Change4QFY004QFY01Change
Income from Operations 20,134 23,765 18.0% 5,705 6,584 15.4%
Other Income 22 58 164.5% 11 15 37.3%
Interest Expenditure 14,370 16,896 17.6% 3,958 4,419 11.7%
Operating Profit (EBDIT) 5,764 6,869 19.2% 1,747 2,165 23.9%
Operating Profit Margin (%)28.6%28.9%30.6%32.9%
Other Expenses 742 914 23.2% 173 191 10.6%
Depreciation 436 457 4.8% 76 97 27.6%
Profit before Tax4,6085,55720.6%1,5091,89125.3%
Tax 590 820 39.0% 169 316 86.7%
Profit after Tax/(Loss) 4,018 4,737 17.9% 1,340 1,576 17.6%
Net profit margin (%)20.0%19.9%23.5%23.9%
No. of Shares (eoy) (m) 119.1 119.1 119.1 119.1
Diluted Earnings per share*33.739.845.052.9
P/E (at current price)1612
*(annualised)

Remarkably, HDFC has improved its operating margins by 30 basis points to 28.9% for FY01. In the fourth quarter OPM has moved up sharply by 230 basis points to 32.9%. In the first nine months, margins witnessed a de-growth of 43 basis points.

HDFC's approvals during the year grew by 29.7% to Rs 68.8 bn and disbursements by 29.2% to Rs 58 bn ( during the nine months of FY01 approvals and disbursements grew by 31% and 30% respectively). Approvals and disbursements with respect to individual loans registered a growth of 53% and 48% respectively fueled by incentives given in the budget. Its healthy capital adequacy ratio of 12.7% is expected to aid the company in expanding its operations further.

The company's recovery performance continued to be excellent. Its net non performing assets to advances ratio declined to 0.81% from 0.9% in FY00.

The corporation's aggressive focus on retail market by increasing distribution outlets and enhanced tax incentives provided in the last budget has enabled it to maintain a high growth rate. Its retail deposits witnessed a growth of 44% to Rs 27 bn and now accounts for 82% of total deposit base.

At the current market price of Rs 619, HDFC is trading at a P/E multiple of 16 times FY01 earnings and a price to book value ratio of 2 times. The company's performance in general is in line with our projections.

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