X

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: Will it maintain the sheen? - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jul 26, 2002

    HDFC: Will it maintain the sheen?

    HDFC has reported a strong performance again with 20% growth in earnings and an improvement in operating margins for the June quarter. The company's interest income growth however, slowed down due to decline in investment income. HDFC's interest on core loans increased by 17% during the quarter.

    (Rs m) 1QFY02 1QFY03 Change
    Income from operations 6,104 6,809 11.6%
    Other Income 236 230 -2.8%
    Interest expense 4,624 4,975 7.6%
    Net interest income 1,480 1,833 23.9%
    Other expenses 355 375 5.7%
    Operating Profit 1,125 1,459 29.6%
    Operating Profit Margin (%) 18.4% 21.4%  
    Provisions and contingencies 30 30 0.0%
    Profit before Tax 1,332 1,658 24.5%
    Tax 191 285 49.4%
    Profit after Tax/(Loss) 1,141 1,373 20.4%
    Net profit margin (%) 18.7% 20.2%  
    No. of Shares (m) 120.1 121.7  
    Diluted Earnings per share* 37.5 45.1  
    P/E Ratio   13.7  

    HDFC's approvals and disbursements witnessed a commendable growth of over 30% during the quarter. In respect of individual loans, while approvals increased by 35%, disbursements grew by 37%. Individual loans account for over 70% of the total loan portfolio of the company. Lower interest rates, tax incentives and stable property prices have made housing more affordable. The company's robust retail growth was also a result of an increased network of offices and intensified marketing efforts.

    Revenue mix
    (Rs m) 1QFY02 1QFY03 Change
    Interest on loans 4,613 5,395 17.0%
    Dividends 260 266 2.5%
    Lease rental income 126 116 -8.1%
    Other operating income 1,104 1,031 -6.6%
    Total 6,104 6,809 11.6%

    On the liability side too, HDFC's deposits increased by 24% to Rs 97 bn during the June quarter. The total number of deposit accounts now exceeds 1.3 m. The company managed to bring down its cost of deposits, which is reflected from about 300 basis points improvement in operating margins. HDFC has issued Floating Rate Notes (FRN) in international markets for an amount equivalent to US$ 100 m. Overseas borrowings at comparatively lower interest rates seems to have brought down the company's average cost of funds to 10% from 12% in the comparable previous quarter. Steep decline in cost of funds, improved its core loan spread to 1.9% during the quarter from 1.5% in 1QFY02. Also, the company's stringent cost control measures enabled it to improve its cost to income ratio to 18% from 21% in the comparable previous quarter. However, with increasing competition from banks, the company's operating margins could come under pressure in the coming quarters.

    Among other new developments, HDFC has entered into joint venture with Chubb Corp, US for general insurance. HDFC will hold 74% equity in the JV company and the balance will be with Chubb. The JV received the approval on July 18, 2002 from IRDA and plans to begin operations by September 2002. Initially, the company will launch its operations in 6 cities, Mumbai, Delhi, Bangalore, Hyderabad, Pune and Chennai. HDFC has not indicated the amount of investments in this JV.

    At the current market price of Rs 618, HDFC is trading at a P/E of 14x 1QFY03 annualised earnings and price to book value ratio of 2.8x. HDFC's premium valuations are due to its ability to maintain strong growth rates and asset quality, despite stiff competition. However, its incremental investments in insurance are unlikely to generate returns in the near term, which could trim the overall growth of the company in coming years and consequently valuations. Average yield on investments declined to 16.2% in the June quarter from 18.3% in FY02 and 17.7% in 1QFY02.

     

     

    Equitymaster requests your view! Post a comment on "HDFC: Will it maintain the sheen?". 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

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    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.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    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

    HDFC SHARE PRICE


    Aug 23, 2017 10:04 AM

    TRACK HDFC

    HDFC - SHRIRAM TRANSPORT FIN. COMPARISON

    Compare Company With Charts

    COMPARE HDFC WITH

    MARKET STATS