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Housing Development Finance Corporation

Capita Telefolio beats BSE Sensex by almost 200%

A growth shelter
Offers quality earning and lot of value creation in subsidiaries
Over the last three decades, HDFC has turned the concept of housing finance for the growing middle class in India into a world-class enterprise with excellent reputation for professionalism, integrity and impeccable service. Its wide network of 304 offices including 74 offices of wholly-owned distribution company, HDFC Sales Pvt. Ltd., caters to over 2,400 towns and cities. The company also has offices in Dubai, London and Singapore and service associates in the Middle East region to provide housing loans and property advisory services to non-resident Indians and persons of Indian origin. Unrelenting focus on corporate governance, high standards of ethics and clarity of vision, percolate through the organisation, making HDFC one of the best managed companies in India and a model housing finance company for developing countries with nascent housing finance markets. It has undertaken several consultancy assignments in various countries across Asia, Africa and East Europe to support and establish their housing finance institutions. Net interest income grew 20% to Rs 5905.97 crore and net profit went up 17% to Rs 4122.62 crore in year ended March FY 2012 (FY 2012). Consolidated profit after tax (PAT) increased 21% to Rs 5462.51 crore as against Rs 4528.41 crore. in FY 2011. Total assets increased 20% to Rs 167520 crore end March 2012 as against Rs 139242 crore end March 2011. The loan book was Rs 140875 crore as against Rs 117127 crore a year ago. Loans amounting to Rs 4978 crore were sold in the year. The growth in the loan book would have been 25% had the corporation not sold any loans. Loan approvals grew 20% to Rs 90154 crore compared to Rs 75185 crore in the previous year. Loan disbursements rose 18% to Rs 71113 crore as against Rs 60314 crore a year ago. Cumulative loan approvals were Rs 463400 crore and disbursements Rs 373646 crore end March 2012. This is for approximately 4.02 million housing units. The unrealised gains on HDFCs listed investments amounted to Rs 24464 crore end March 2012, up from Rs 21392 crore in the previous year. This excludes the appreciation in the value of the unlisted investments. Gross non-performing loans (NPLs) amounted to Rs 1069 crore end March 2012. This is equivalent to 0.74% of the loan portfolio as against 0.77% in the previous year. Year-end gross NPLs have edged down by five-seven basis points annually for seven years now, driving near-zero credit costs over a sustained period. Outstanding provisions including standard asset provisions on the balance sheet are Rs 1670 crore crore (1.16% of outstanding loans) as against the stipulated requirement of Rs 1400 crore. Capital adequacy ratio is 14.6% of the risk weighted assets as against the minimum requirement of 12%. Tier 1 capital adequacy is 11.7% against a minimum requirement of 6%. Over the years, HDFC has emerged as a financial conglomerate with presence in the entire gamut of financial services including banking, insurance (life and non-life), asset management, real estate venture capital and more recently education loans. HDFC AMC reported PAT of Rs 269.14 crore In FY 2012. HDFC Mutual Fund is ranked first in the industry by average assets under management. Gross premium income of HDFC Life grew 13% to Rs 10202 crore compared with Rs 9004 crore in the previous year. The sum assured in force was Rs 138718 crore compared with Rs 98917 crore a year ago. HDFC Life is now ranked No. 2 among privatesector life insurers by market share based on the weighted received premium of individual business in FY 2012. The general insurance industry expanded 24% in FY 2012. In comparison, HDFC Ergo grew 44%, with a gross written premium (excluding cessions from the motor pool) of Rs 1874 crore as against Rs 1302 crore in the previous year. The growth outlook remains robust, with smaller towns continuing to drive demand. HDFC operates mainly in the lowerticket, owner-operator market, where demand cycles tend to be less cyclical. The large metro market (especially Mumbai) has been slow, but tier 2 and tier 3 cities still see robust demand. Competitive intensity has been much lower since the beginning of FY 2012 after SBI and some PSU banks rationalised pricing in the market. We expect HDFC to register standalone EPS of Rs 33.1 in FY 2013. The share price trades at Rs 641. P/E works out to 19.3. Standalone book value of HDFC stood at Rs 129 at the end of March 2012. Adjusted book value (including unrealised gain on listed investment but without considering unreaslised gain on unlisted investments) stood at Rs 294. Thus, price / current adjusted BV stands at just 2.2.

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As strong as ever

HDFCs growth outlook remains robust, with smaller towns continuing to drive demand. Competitive intensity has also come down

HDFC: Standalone financials

1003 (12) 1103 (12) 1203 (12) 1303 (12P)
Inc. from op. 11128.88 12493.19 17062.75 22522.83 Interest Exp 7063.08 7559.94 11156.78 15507.92 NII 4065.80 4933.25 5905.97 7014.91 Other Income 231.95 384.88 291.53 309.02 Total Income 4297.75 5318.13 6197.50 7323.93 Op. Expenses 363.56 431.97 511.34 598.27 Op. Profits 3934.19 4886.16 5686.16 6725.66 Depreciation 18.20 19.20 20.54 22.18 PBT 3915.99 4866.96 5665.62 6703.48 Prov. for tax 1089.50 1332.00 1543.00 1809.94 Net profit 2826.49 3534.96 4122.62 4893.54 EPS*(Rs) 19.1 23.9 27.9 33.1 * Annualised on current equity of Rs 295.39 crore. Face Value: Rs 2. Figures in Rs crore. (P): Projections.
Source: Capitaline Databases

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May 28 Jun 10, 2012 CAPITAL MARKET