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Company Report

HDFC

For Housing Development Finance Corporation Limited growth seems to be just picking up after having stagnated for some time and subsequently drifting southwards.

For the second quarter ended September, the company has reported a 13 per cent rise over the previous corresponding quarter in total income, which stood at Rs 762.27 crore (Rs 673.36 crore).

Against this the total spending having risen by 11 per cent to Rs 595.12 crore (Rs 534.87 crore) net profits moved up by 21 per cent over the year-ago period to Rs 167.15 crore (Rs 138.49 crore).

Core operational income has been showing a similar trend with a quarterly growth rate of an average of 13 per cent over the past two years. This quarter it reported a total interest income of Rs 760.52 crore (Rs 71.49 crore) up 13 per cent from the year-ago period.

It has been consistently reducing its interest rates to avoid the competitive pressure from all sides. With interest rates at the lowest level in many years interest outflow was up by 9 per cent over the previous corresponding period to Rs 548.52 crore (Rs 500.62 crore).

A 27 per cent rise in the staff cost at Rs 13.22 crore (Rs 10.41 crore) and a 18 per cent rise in the other expenditure took the overall operational spending up by 10 per cent over the previous corresponding period. Margins improved slightly.

Operating profit moved up by 24 per cent to Rs 212 crore (Rs 170.87 crore). OPM at 28 per cent was 3 percentage points higher than that recorded during the year-ago period. With Rs 42.42 crore (Rs 28.36 crore) provided for in taxes the company reported a net profit of Rs 167.15 crore up 21 per cent from the year-ago periodís profit of Rs 138.49 crore.

Income from operations was up 8 per cent over the June quarter income of Rs 702.88 crore. Operating expenditure was up by 3 per cent against Rs 530.51 crore it reported during the June quarter bringing about a 23 per cent improvement in operating profits.

With the overall expenditure up by 5 per cent over the June quarter net profit rose by 22 per cent. The stock currently trades at a PE of 11 times to its September quarter annualised earnings of Rs 54.86 per share. At the current growth rates it looks mildly undervalued. It has announced a 1:1 bonus and a share buyback programme that should keep the stock up for now.

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