Gruh Finance

A subsidiary of HDFC, which currently holds 58.55% stake posted a good set of numbers for Q1FY18.  On a 15% (YoY) rise in revenue at Rs.398 crore, the company posted a net profit of Rs.72 crore, up 20%. The company’s main business is giving loans for buying/making residential homes.

Its provisioning stood at Rs.28 crore, up 2.25 times on YoY and up almost 19 times sequentially!

Its loan assets during the quarter grew 19%  at Rs.13,695 crore and this, as per the bank’s target of over 20% was lower on account of pre-payments, which has risen from 11% to 13%.

In terms of asset quality, it is one of the best but this time saw an increase due to rise in provisioning. Its Net NPA rose from 0.27% to 0.16% and Gross NPA rose from 0.56% to 0.96%.

For small lending companies like Gruh, the interest spread is decreasing as most banks are now concentrating on retail lending and less on corporate, each offering competitive rates. This, plus pre-payments could put some pressure.  Seasonally, for Gruh, Q3 and Q4 are the best.