HDFC Shares Rally On Quarterly Numbers, Dividend

Shares in India's largest housing finance company, HDFC rallied 2 per cent in early trade, following its quarterly numbers.

India's largest housing finance company, HDFC reported net profits that were largely in line with expectations. The firm reported a net profit of Rs 2,233 crore for the quarter ended March 31, down from Rs 2,862 crore in the corresponding quarter of the previous year.

The company has also declared a dividend of Rs 21 per share. Dividend income during the quarter was just Rs 2 crores, as some of the subsidiaries of the company did not declare dividend, due to the abolishment of dividend distribution tax.

HDFC's capital adequacy ratio stood at 17.7% of which Tier 1 capital was 16.6% and Tier II was 1.1%.

Analysts are hopeful that the company would see a recovery in loans in the next few quarters.

During the year ended March 31, 2020, 36% of home loans approved in volume terms and 18% in value terms have been to customers from the Economically Weaker Section (EWS) and Low Income Groups (LIG).

Impact of Covid 19

"The impact of COVID-19 was felt towards the last fortnight of the financial year. Retail loan disbursements were disrupted in the latter half of the month of March. 97% of the Corporation's customers use electronic modes of repayment for their instalments. However, in respect of 3% of borrowers, where follow ups would have otherwise been done through personal visits, this was not possible owing to the national lockdown. Recovery efforts were hampered in the latter half of March 2020, which resulted in an increase in individual non-performing loans," the company said in a release.

"With offices being closed in the months of April and part of May, individual loan disbursements have continued to be impacted. Loan approvals and loan servicing requirements are being done online.

In accordance with the directions by the Reserve Bank of India, the Corporation has offered the moratorium to customers whose loans were standard as at February 29, 2020 for the period March 1, 2020 and May 31, 2020. On May 22, 2020, the RBI further permitted an extension the moratorium period by 3 months i.e. up to August 31, 2020.

The Corporation has adopted an 'opt-in' structure for the moratorium. As of date, approximately 26% of the Corporation's loans under management have opted for the moratorium. Individual loans under moratorium account for 21 % of the individual loan portfolio," the company said in a release.

The shares of HDFC were last trading at Rs 1,538.