HDFC shares fell as much as 2.7 per cent on Thursday as the mortgage lender’s Q3 earnings missed estimates. Slower loan growth and higher provisions hit HDFC in the December quarter, analysts say.
HDFC’s Q3 standalone net profit grew 6.7 per cent to Rs 1,520 crore, while its net interest income (difference between interest earned and interest paid) rose 8.2 per cent to Rs 2,182 crore. However, HDFC’s advances grew 12.8 per cent year-on-year, missing Street estimates.
Its retail loan growth was relatively healthy at 17 per cent. Corporate loans grew 9 per cent.
HDFC made a total provision of Rs 68 crore in Q3, which was 51 per cent higher annually and up 31 per cent sequentially.
Its net interest margin, which is an indicator of profitability, fell 10 basis points sequentially to 3.85 per cent on account of lower spreads.
Avinnash Gorakssakar, head of research at Precision Investment Services told NDTV Profit that margin pressure would continue in the near term.
He prefers Indiabulls Housing Finance over HDFC. “In terms of risk-reward, Indiabulls Housing would give a better return than HDFC,” he added.
Both Credit Suisse and CLSA have cut their earnings per share estimates (EPS) for HDFC by 4 per cent.
As of 10.39 a.m., HDFC shares traded 1.31 per cent lower at Rs 1,152.4 apiece compared to 0.1 per cent drop in the broader Sensex.