HDFC Ltd

The financial institution reported numbers for the second quarter on expected lines. Total income for Q2FY14 stood at Rs.9971 crore, up 15% (YoY) and consolidated net profit for the quarter was at Rs.1891 crore, up 20% (YoY) and QoQ, it was up 11%. On a standalone basis, net profit at Rs.1266 crore was up 10% (YoY). NII rose 14% at Rs.1579 crore.  Profit from sale of investment was down 8% at Rs 87 crore (Rs 94 crore). The surge in profit can be attributed to a 13% rise in its mainfray, home loans to individuals and builders.

Total assets were up 17% at Rs.2.12 lakh crore and the loan book rose 19% at Rs.1.85 lakh crore.  It has set a target of 18.20% growth in loan book for FY14 and going by this performance, it looks like the institution is very much on the right track. With regards to asset quality, that remains intact, with gross NPA coming at 0.79% v/s 0.77% (YoY).  Its provision for contingencies showed a sharp downturn, from Rs.40 crore to Rs.15 crore and this was due to National Housing Bank reducing  the provisioning for standard loans for commercial real estate-residential housing.  But its provisioning was at Rs. Rs 1,811 crores as on September 30, of which Rs 536 crore was on account of non-performing assets and the balance Rs 1,275 crore was in respect of general provisioning on standard loans and other provisions. Unrealised gains on HDFC’s listed investments were Rs 28,938 crore.

For H1FY14, HDFC’s  consolidated profit after tax  was at Rs.3598 crore, up 26%. Share of profit from subsidiary was at 32% of total H1FY14 profit.  Capital adequacy ratio increased to 19% as against the minimum requirement of 12%. Fundamentally, HDFC remains rock solid. Those looking to build a long term portfolio, this is a must-have stock.