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: Robust growth on healthy credit offtake - Views on News from Equitymaster
StockSelect
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

HDFC: Robust growth on healthy credit offtake
Nov 8, 2016

HDFC declared its results for the second quarter (2QFY17). The institution has reported 12.6% YoY growth in net interest income while net profits have grown by 13.8% YoY during 2QFY17. Here is our analysis of the results.

Performance Summary
  • Backed by a 15.7% YoY growth in loan book, Net Interest Income (NII) grew by a healthy 12.6% YoY in September 2016 quarter. For 1HFy17, NII grew by 10.3% YoY.
  • Due to lower profit earned from sale of investments, other income fell by 35.3% YoY during the quarter. On the back of pre-tax gain of Rs 9.2 bn from the stake sale in HDFC ERGO General Insurance booked in the first quarter, other income earned jumped 10 folds in 1HFY17.
  • Growth in operating costs was reined in at 9.4% YoY in 2QFY17. The cost-to-income ratio was marginally lower at 7.2% during the quarter. For 1HFY17, the cost-to-income ratio increased to 9.7% as compared to 9% in the year-ago period.
  • The provisioning and contingencies were up by a steep 82.7% in the September 2016 quarter. As HDFC made a special one-time provision of Rs 4.5 bn towards standard assets and other contingencies in 1QFY17, the overall provisioning increased 4 folds in 1HFY17.
  • Net profit increased by a healthy 13.8% YoY in 2QFY17 aided by a slower rise in the tax outgo. The tax incidence stood as 28.6% in 2QFY17 as compared to 30.9% reported in 2QFY16. For 1HFY17, the earnings growth has been a faster 24.7% YoY driven largely by a pre-tax gain of Rs 9.2 bn from stake sale in insurance subsidiary.
  • The gross non-performing assets (GNPAs) ratio increased slightly to 0.76% as at 30th September 2016. The individual loans portfolio has reported 0.61% as GNPAs ratio; while that for the non-individual portfolio stood at 1.11%. The asset quality of HDFC Ltd remains one of the best in the industry.
  • HDFC's capital adequacy ratio stood at 16.5% out of which Tier I capital was 13.3% whereas Tier II was 3.2%. The NBFC has raised an amount of Rs 50 billion through rupee denominated bonds (Masala bonds).

    Standalone financial performance snapshot
    (Rs m) 2QFY16 2QFY17 Change 1HFY16 1HFY17 Change
    Interest Income 73,596 80,632 9.6% 143,551 155,239 8.1%
    Interest Expense 48,586 52,459 8.0% 96,831 103,720 7.1%
    Net Interest Income 25,010 28,174 12.6% 46,720 51,519 10.3%
    Net interest margins 3.95% 3.85%
    Other Income 618 399 -35.3% 956 9,726 917.4%
    Other Expense 1,872 2,048 9.4% 3,901 4,322 10.8%
    Provisions and contingencies 520 950 82.7% 1,020 4,350 326.5%
    Profit before tax 23,236 25,575 10.1% 42,755 52,572 23.0%
    Tax 7,190 7,310 1.7% 13,100 15,600 19.1%
    Effective tax rate 30.9% 28.6% 30.6% 29.7%
    Deferred Tax Liability 0.0 0.0 0.0
    Profit after tax/ (loss) 16,046 18,265 13.8% 29,655 36,972 24.7%
    Net profit margin (%) 21.8% 22.7% 20.7% 23.8%
    No. of shares (m) 1584.0
    Book value per share (Rs)* 233.9
    P/BV (x) 5.9

    * (Standalone book value as on 30th Sep 2016)

To Read the Full Story, Subscribe or Sign In



DISCLOSURES UNDER SEBI (RESEARCH ANALYSTS) REGULATIONS, 2014
INTRODUCTION:
Equitymaster Agora Research Private Limited (hereinafter referred to as "Equitymaster"/"Company") was incorporated on October 25, 2007. Equitymaster is a joint venture between Quantum Information Services Private Limited (QIS) and Agora group. Equitymaster is a SEBI registered Research Analyst under the SEBI (Research Analysts) Regulations, 2014 with registration number INH000000537.

BUSINESS ACTIVITY:
An independent research initiative, Equitymaster is committed to providing honest and unbiased views, opinions and recommendations on various investment opportunities across asset classes.

DISCIPLINARY HISTORY:
There are no outstanding litigations against the Company, it subsidiaries and its Directors.

GENERAL TERMS AND CONDITIONS FOR RESEARCH REPORT:
For the terms and conditions for research reports click here.

DETAILS OF ASSOCIATES:
Details of Associates are available here.

DISCLOSURE WITH REGARDS TO OWNERSHIP AND MATERIAL CONFLICTS OF INTEREST:
  1. 'subject company' is a company on which a buy/sell/hold view or target price is given/changed in this Research Report
  2. Equitymaster and its Associate have financial interest in the HDFC Ltd..
  3. Equitymaster’s investment in the subject company is as per the guidelines prescribed by the Board of Directors of the Company.
  4. Equitymaster’s Research Analyst or his/her relative have no financial interest in the subject company.
  5. Neither Equitymaster, it’s Associates, Research Analyst or his/her relative have actual/beneficial ownership of one percent or more securities of the subject company at the end of the month immediately preceding the date of publication of the research report.
  6. Neither Equitymaster, it’s Associates, Research Analyst or his/her relative have any other material conflict of interest at the time of publication of the research report.
DISCLOSURE WITH REGARDS TO RECEIPT OF COMPENSATION:
  1. Neither Equitymaster nor it's Associates have received any compensation from the subject company in the past twelve months.
  2. Neither Equitymaster nor it's Associates have managed or co-managed public offering of securities for the subject company in the past twelve months.
  3. Neither Equitymaster nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  4. Neither Equitymaster nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  5. Neither Equitymaster nor it's Associates have received any compensation or other benefits from the subject company or third party in connection with the research report.
GENERAL DISCLOSURES:
  1. The Research Analyst has not served as an officer, director or employee of the subject company.
  2. Equitymaster or the Research Analyst has not been engaged in market making activity for the subject company.
Definitions of Terms Used:
  1. Buy recommendation: This means that the subscriber could consider buying the concerned stock at current market price keeping in mind the tenure and objective of the recommendation service.
  2. Hold recommendation: This means that the subscriber could consider holding on to the shares of the company until further update and not buy more of the stock at current market price.
  3. Buy at lower price: This means that the subscriber should wait for some correction in the market price so that the stock can be bought at more attractive valuations keeping in mind the tenure and the objective of the service.
  4. Sell recommendation: This means that the subscriber could consider selling the stock at current market price keeping in mind the objective of the recommendation service.
Feedback:
If you have any feedback or query or wish to report a matter, please do not hesitate to write to us.

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


Oct 17, 2017 (Close)

TRACK HDFC

HDFC 5-YR ANALYSIS

Detailed Financial Information With Charts

COMPARE HDFC WITH

MARKET STATS