HDFC Share buying and selling shares in India

Housing Development Finance Corporation (updated - 14 Jan 2012)
The premium valuations that India’s top mortgage lender HDFC commands could be under a bit of a threat judging by its performance in the quarter to December 2011. The lender reported a 10% rise in profit, the slowest in three years, indicating the challenges it faces with the slowdown in the economy and the moderating demand.

HDFC has dominated the local home loan segment for years, commanding premium valuations over its peers thanks to stable spreads, supreme asset quality and for its professional approach in the sector. However, the current macro-economic scenario could be yet another test of the efficiency of its business.

The lender registered a 39% rise in income from operations to Rs. 4,379.34 crore, while interest charges shot up 51% to Rs. 3,012.41 crore. As a result, its net interest income, the difference between interest earned and interest paid, rose by 18% against the year-ago period. The decline in profit from sale of investment also hurt its performance.

The HDFC management says that was largely on account of a stake sale last year which did not happen this year. Judging by its performance, the slowdown in credit and lower disbursement of loans in the sector overall has started to impact HDFC’s performance. In December 2008, HDFC reported a 2% decline in profit, following which its profit rose 17%. Since then, it has never reported a profit growth lower than 20%. Despite these concerns, HDFC’s loan book rose by 21% to Rs. 1,32,208 crore in the quarter driven by growth in loans to individual borrowers. Also, the percentage of its non-performing loans fell despite the difficult market environment affirming its position as the leader in the individual mortgage segment. The spread on loans over the cost of borrowing stood at 2.27%, well within the stated range of 2.15-2.35%. HDFC’s capital adequacy is now 13.9% as against the minimum requirement of 12%, indicating strong asset quality. After the results were announced, the stock rose 1% to close at Rs. 687 on the Bombay Stock Exchange. The stock is available at 5.2 times its book value, excluding investments.
Source - Economic Times

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