Housing Development Finance (HDFC) Q4 16/17 earnings summary

Executive summary

• FY17 total income rose 7% to ₹33,160 crore; PAT increased 5% to ₹7,443 crore. Adjusting for investment-sale gains and one-time provisions, PBT grew 11% to ₹10,082 crore.

• AUM expanded 16% to ₹3,38,478 crore; the individual and non-individual loan books grew 16% and 17%, respectively.

• Affordable housing remained a strategic growth opportunity, supported by government initiatives; management highlighted supply, approval timelines and land costs as key constraints.

Financial highlights

• Total income was ₹33,160 crore, up 7% YoY; PBT was ₹10,727 crore, up 6%, and PAT was ₹7,443 crore, up 5%.

• Investment disposals generated ₹1,002 crore in profit, including ₹920 crore from HDFC ERGO shares; a voluntary, one-time ₹275 crore special provision was charged.

• Excluding investment-sale gains and the special provision, PBT was ₹10,082 crore versus ₹9,045 crore, up 11% YoY.

• Consolidated PBT increased 9% to ₹12,650 crore; PAT attributable to shareholders rose 8% to ₹11,051 crore, with EPS of ₹68.87 basic and ₹68.30 diluted.

Outlook and guidance

• Management expressed its strongest optimism for the housing sector in four decades, citing affordable-housing incentives, infrastructure status and expanded interest subsidies.

• Affordable housing growth depends on adequate unit supply, faster building approvals and lower land costs; lengthy construction cycles remain a constraint.

• The Credit Linked Subsidy Scheme was extended to middle-income households; eligible loans began from January 1, 2017, with tenors up to 20 years.

• Strategy prioritises housing loans and incremental housing finance; management cautioned against aggressive growth in loans against property amid emerging stress.