Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
HDFC: Expectations - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jul 16, 2001

    HDFC: Expectations

    HDFC is expected to announce its first quarter results in the current week. The company had reported over 18% growth in profits for the year ended March ’01 with a marginal improvement in operating margins.

    HDFC’s approvals and disbursals have shown a robust growth rate of 30% and 29% respectively in FY01. This was remarkable considering the industrial slowdown beginning 4QFY01. The housing finance sector is expected to grow by about 20% in the current year.

    The tax benefits announced in the budget for FY02, coupled with the low real estate prices, is expected to spur housing demand in the country. 70% of HDFC’s loans are to the retail segment and 82% of its deposits are from individuals and trusts. Exposure to retail segment has offered the company relatively higher interest spread at about 2%. With mutual funds failing to offer attractive yields and ban on deferral products, HDFC’s current deposit base of Rs 72.5 bn is likely to increase considerably in the current year. However, on the lending side the company could face strong competition from ICICI, SBI and other public sector banks.

    Quarterly analysis
    (Rs m) 1QFY99 1QFY00 1QFY01 1QFY02E 4 qtr CAGR
    Total Income 3,960 4,492 5,527 6,356 17.1%
    Interest Expense 2,880 3,287 4,117 4,572 16.7%
    Operating Profit 1,074 1,201 1,405 1,778 18.3%
    Other Expenses 169 192 251 303 21.6%
    Depreciation 133 120 108 126 -1.8%
    Profit before Tax 779 893 1,052 1,355 20.3%
    Tax 123 137 141 176 12.7%
    Profit after Tax 656 756 911 1,179 21.6%
    No. of shares (m) 119.1 119.1 119.1 119.1  

    Key ratios
    Particulars 1QFY99 1QFY00 1QFY01 1QFY02E
    OPM 27.2% 26.8% 25.4% 28.0%
    Tax / PBT 15.8% 15.3% 13.4% 13.0%
    NPM 16.6% 16.8% 16.5% 18.5%
    EPS (Rs) 22.0 25.4 30.6 39.6

    HDFC’s first quarter total income is expected to rise by 15% and profits are projected to jump by about 29%. A substantial rise in operating margins will be largely due to low cost of funds (retail deposits). HDFC’s lending rates have not declined in proportion to fall in deposit rates. This would fuel its operating margins.

    The company’s diversification into other areas including mutual fund, insurance and IT although considered to be revenue boosters, in the short term these businesses are unlikely to add to its bottomline. Insurance business where the company has made maximum investment would breakeven only after 5 years. Comparatively higher returns than housing finance business (ROE of 20%) has forced the company to venture into these areas.

    At the current market price of Rs 665, HDFC is trading at a P/E multiple of 14.5x and Price/Book value (PBV) ratio of 2.9x FY02 projected earnings. In the past five years, the stock’s P/E was in the range of 10-15 times and PBV was in the range of 1.7 – 3 times.



    Equitymaster requests your view! Post a comment on "HDFC: Expectations". Click here!


    More Views on News

    HDFC: Red Flag in Developer Loans (Quarterly Results Update - Detailed)

    Aug 10, 2017

    HDFC starts FY18 on robust loan growth but asset quality slips on increased exposure to developer loans.

    HDFC: Conservative Provisioning tempers down FY17 earnings (Quarterly Results Update - Detailed)

    May 9, 2017

    HDFC ends FY17 on a tepid note as it remains conservative on the asset quality front.

    HDFC: High Provisioning Drags Down Earnings Growth (Quarterly Results Update - Detailed)

    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.

    Shriram Trans Fin: FY17 Ends on a Tepid Note due to Regulatory Headwinds (Quarterly Results Update - Detailed)

    Jun 22, 2017

    Demonetisation led slowdown coupled with shift to stringent bad loan norms keep Shriram Transport Finance on a slow wicket.

    Power Finance Corp: Alignment with RBI Norms Knocks Down FY17 Earnings (Quarterly Results Update - Detailed)

    Jun 14, 2017

    Power Finance Corporation earnings hit by RBI mandated higher provision on state government power generation projects where the recovery continues to be 100%.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 18, 2017 (Close)



    Detailed Quarterly Results With Charts