press release housing development finance … development...housing development finance corporation...
TRANSCRIPT
1 CARE Ratings Limited
Press Release
Housing Development Finance Corporation Limited
December 06, 2017
Ratings
Facilities Amount
(Rs. crore)
Rating1 Rating Action
Long Term Bank Facilities 3,582
(reduced from 4,575.08 )
CARE AAA; Stable
(Triple A, Outlook: Stable)
Reaffirmed
Short Term Bank Facilities 21,652.78
(increased from 13,884.08 )
CARE A1+
(A One Plus)
Reaffirmed
Total 25,234.78
(reduced from 18,459.16)
(Rupees Twenty Five thousand
two hundred thirty four crores
and seventy eight lakhs only )
Details of instruments/facilities in Annexure-1
Detailed Rationale & Key Rating Drivers
The ratings factors in the market leadership of Housing Development Finance Corporation Ltd (HDFC) in the housing finance industry, long-standing track record of operations, adequate capitalisation levels & strong resource raising ability, strict underwriting standards and risk management procedures and good asset quality. The ratings also consider HDFC’s vast marketing as well as distribution network and its ability to raise resources. The rating also takes into account HDFC’s strong business franchise of subsidiaries/ associates in Asset Management, Life Insurance, General Insurance, Housing Finance and providing Educational loans and Real Estate funding. The rating draws comfort from underlying potential value in some of its investments. HDFC’s ability to maintain spreads in a competitive environment, asset quality, capital adequacy and support its subsidiaries would be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Strengths Market leadership in the housing finance industry complemented by strong domestic franchise HDFC is the market leader in the housing finance industry in India. The company has a strong domestic presence comprising 439 outlets. In addition, HDFC covers several locations in the country through outreach programmes. HDFC also has an international presence, which primarily caters to the non-resident Indians. HDFC’s outstanding loan portfolio grew by around 14.6% (y-o-y) during FY17 to Rs.2,96,472 crore as on March 31, 2017. As on September 30, 2017 outstanding loan portfolio grew by around 18% (y-o-y) to Rs. 324077 crore.
Strong track record with the experienced management Established in 1977, the company has a strong track record in the housing finance sector with a stable and experienced management. The average tenure of the senior management in HDFC is over 25 years. Mr. Deepak Parekh is the Chairman of HDFC Ltd. The day to day affairs are handled by Mr.Keki Mistry, (Vice Chairman & CEO), Ms.Renu Sud Karnad (Managing Director) and Mr. V. Srinivasa Rangan (Executive Director) who are assisted by an experienced team. Healthy capitalization levels HDFC continues to maintain healthy capitalization levels supported by its strong capital raising ability. It reported Capital Adequacy Ratio (CAR) of 14.5%(after deducting investment in HDFC Bank from Tier I capital) as on March 31, 2017 [P.Y.: 16.6%] with Tier I CAR: being 11.8% [P.Y.: 13.2%].As on March 31, 2017, HDFC’s gearing levels stood at 7.06x [P.Y.: 6.95x]. As on September 30, 2017, HDFC reported Total CAR and Tier I CAR of 15.10% and 12.60% respectively. Whereas, as on September 30, 2017, HDFC’s gearing levels stood at 6.94x. Strict underwriting standards and risk management procedures help maintain asset quality A long track record and experience has helped HDFC build strict underwriting standards and risk management procedures. The quality of standards and risk management system help the company to maintain a healthy asset quality,
1Complete definitions of the ratings assigned are available at www.careratings.com and in other CARE publications.
2 CARE Ratings Limited
Press Release
thereby, leading to lower credit costs for the company over the years. HDFC continues to have one of the most stable asset quality parameters in the housing finance industry. As on March 31, 2017, it reported Gross NPA ratio of 0.79% [P.Y.: 0.70%]. GNPAs in individual and non-individual loan book stood at 0.61% and 1.16% of the respective portfolios as on March 31, 2017.NNPA and NNPA/ networth as on March 31, 2017 stood at 0.56% [P.Y.: 0.49%] and 4.15% [P.Y.: 3.71%]. However, considering the provisions for contingencies, its NNPA ratio continues to be nil. As on September 30, 2017, HDFC’s GNPA and NNPA ratio stood at 1.14% and 0.80% respectively. Strong resources & liquidity profile HDFC has strong and well-diversified resource profile. During FY17 there was a shift in sourcing of borrowings from bank facilities to market borrowings. As on March 31, 2017, market borrowings by way of debentures and securities constituted 56% [P.Y.: 51%] of the total borrowings, deposits constituted 31% [P.Y.: 31%] and term loans constituted 13% [P.Y.:18%].The overall liquidity profile of HDFC was comfortable as on Mar.31, 2017. Further, the company has proven ability to raise resources both in domestic and international markets which provides additional comfort. Consistent healthy financial metrics HDFC’s outstanding loan portfolio grew by around 14.60% (y-o-y) during FY17 to Rs.2,96,472 crore as on March 31, 2017. Of the gross loan book, loans to individuals constituted around 73% [P.Y.: 69%] with the rest mainly comprising loans to the corporate bodies/ developers. HDFC’s total income registered healthy growth of 11% (after removing the impact of abnormal gains and additional provision made against the same) in FY17 mainly due to healthy growth in interest income, fee income and profit on sale of investment. Further stable spreads, lower operating and credit costs have led to 4.93% y-o-y growth in net profit during FY17(PY included stake sale of HDFC Life). HDFC Ltd ROTA stood at 2.38% during FY17 [P.Y.: 2.61%]. During H1FY18, HDFC reported net profit of Rs.3,656 crore over total income of Rs.16,902 crore. As on September 30, 2017, HDFC Ltd ROTA stood at 4.08%. Strong business franchise of subsidiaries/associates HDFC’s subsidiaries/associates are important players in the banking industry, Asset Management business, Life & General Insurance sector. HDFC bank is the second largest private sector bank. HDFC Asset Management ranks second in the industry on the basis of average assets under management. HDFC Standard Life Insurance and HDFC Ergo General Insurance are amongst the leading insurers in life and general insurance segment, respectively.
Analytical approach: Standalone
Applicable Criteria Criteria on assigning Outlook to Credit Ratings CARE Policy on Default Recognition Non Banking Financial Companies Financial ratios - Financial Sector CARE's criteria on Short Term Instruments
About the Company
HDFC Ltd. was incorporated in 1977 as the first mortgage finance company in India. With over four decades of successful
operations, HDFC offers a whole gamut of products like loans to individuals, loans to corporates, construction finance,
and lease rental discounting. The financial conglomerate has subsidiaries and associates in insurance (general and life),
asset management, education finance, venture funds and banking services. The company had a pan-India presence
through 439 outlets (including 135 offices of its distribution subsidiary – HDFC Sales Private Limited) as on March 31,
2017. In addition, HDFC covers several locations through outreach programmes. Distribution channels form an integral
part of the distribution network with home loans being distributed through HSPL, HDFC Bank Ltd. and third party DSAs.
Brief Financials (Rs. crore) FY16 (A) FY17 (A)
Total operating income 30957 33160
PAT 7093 7443
Interest coverage (times) 1.52 1.51
Total Assets 288877 336358
Net NPA (%) 0.49 0.56
ROTA (%) 2.61 2.38
A: Audited
3 CARE Ratings Limited
Press Release
Status of non-cooperation with previous CRA: Not Applicable
Any other information: Not Applicable
Rating History for last three years: Please refer Annexure-2
Note on complexity levels of the rated instrument: CARE has classified instruments rated by it on the basis of complexity.
This classification is available at www.careratings.com. Investors/market intermediaries/regulators or others are welcome
to write to [email protected] for any clarifications.
Analyst Contact:
Name: Mr Ravi Kumar
Tel: 022-67543421
Mobile: + 91-9004607603
Email: [email protected]
**For detailed Rationale Report and subscription information, please contact us at www.careratings.com
About CARE Ratings:
CARE Ratings commenced operations in April 1993 and over two decades, it has established itself as one of the leading credit rating agencies in India. CARE is registered with the Securities and Exchange Board of India (SEBI) and also recognized as an External Credit Assessment Institution (ECAI) by the Reserve Bank of India (RBI). CARE Ratings is proud of its rightful place in the Indian capital market built around investor confidence. CARE Ratings provides the entire spectrum of credit rating that helps the corporates to raise capital for their various requirements and assists the investors to form an informed investment decision based on the credit risk and their own risk-return expectations. Our rating and grading service offerings leverage our domain and analytical expertise backed by the methodologies congruent with the international best practices.
Disclaimer
CARE’s ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE has based its ratings/outlooks on information obtained from sources believed by it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments.
In case of partnership/proprietary concerns, the rating /outlook assigned by CARE is based on the capital deployed by the partners/proprietor and the financial strength of the firm at present. The rating/outlook may undergo change in case of withdrawal of capital or the unsecured loans brought in by the partners/proprietor in addition to the financial performance and other relevant factors.
Annexure-1: Details of Instruments/Facilities
Name of the Instrument Date of
Issuance
Coupon
Rate Maturity Date
Size of the
Issue (Rs.
crore)
Rating assigned along
with Rating Outlook
Long-term Bank Facilities - - Upto 14 years 3582 CARE AAA; Stable
Short-term Bank Facilities - - 0-364 days 21652.78 CARE A1+
4 CARE Ratings Limited
Press Release
Annexure-2: Rating History of last three years
Sr. No.
Name of the Instrument/Bank
Facilities
Current Ratings Rating history
Type
Amount Outstanding (Rs. crore)
Rating
Date(s) & Rating(s)
assigned in 2017-2018
Date(s) & Rating(s)
assigned in 2016-2017
Date(s) & Rating(s)
assigned in 2015-2016
Date(s) & Rating(s)
assigned in 2014-2015
1. Issuer Rating-Issuer Ratings
Issuer rat
0.00 CARE AAA (Is); Stable
1)CARE AAA (Is); Stable (29-Sep-17)
1)CARE AAA (Is) (16-Sep-16)
1)CARE AAA (Is) (10-Aug-15)
1)CARE AAA (Is) (07-Jul-14)
2. Term Loan-Short Term ST 21652.78 CARE A1+
1)CARE A1+ (29-Sep-17) 2)CARE A1+ (10-Jul-17) 3)CARE A1+ (04-May-17)
1)CARE A1+ (06-Dec-16) 2)CARE A1+ (16-Sep-16) 3)CARE A1+ (13-Jun-16)
1)CARE A1+ (04-Feb-16) 2)CARE A1+ (19-Jan-16) 3)CARE A1+ (14-Sep-15) 4)CARE A1+ (10-Aug-15) 5)CARE A1+ (03-Jun-15)
1)CARE A1+ (11-Mar-15) 2)CARE A1+ (17-Nov-14) 3)CARE A1+ (03-Sep-14) 4)CARE A1+ (07-Jul-14) 5)CARE A1+ (12-Jun-14)
3. Term Loan-Long Term LT 3582.00 CARE AAA; Stable
1)CARE AAA; Stable (29-Sep-17) 2)CARE AAA; Stable (10-Jul-17) 3)CARE AAA; Stable (04-May-17)
1)CARE AAA (06-Dec-16) 2)CARE AAA (16-Sep-16) 3)CARE AAA (13-Jun-16)
1)CARE AAA (04-Feb-16) 2)CARE AAA (19-Jan-16) 3)CARE AAA (14-Sep-15) 4)CARE AAA (10-Aug-15) 5)CARE AAA (03-Jun-15)
1)CARE AAA (11-Mar-15) 2)CARE AAA (17-Nov-14) 3)CARE AAA (03-Sep-14) 4)CARE AAA (07-Jul-14) 5)CARE AAA (12-Jun-14)
4. Commercial Paper ST 75000.00 CARE A1+
1)CARE A1+ (29-Sep-17)
1)CARE A1+ (16-Sep-16)
1)CARE A1+ (19-Jan-16)
-
5 CARE Ratings Limited
Press Release
CONTACT Head Office Mumbai
Ms. Meenal Sikchi Mr. Ankur Sachdeva Cell: + 91 98190 09839 Cell: + 91 98196 98985 E-mail: [email protected] E-mail: [email protected]
Ms. Rashmi Narvankar Mr. Saikat Roy Cell: + 91 99675 70636 Cell: + 91 98209 98779
E-mail: [email protected] E-mail: [email protected]
CARE Ratings Limited (Formerly known as Credit Analysis & Research Ltd.)
Corporate Office: 4th Floor, Godrej Coliseum, Somaiya Hospital Road, Off Eastern Express Highway, Sion (East), Mumbai - 400 022
Tel: +91-22-6754 3456 | Fax: +91-22-6754 3457 | E-mail: [email protected]
AHMEDABAD Mr. Deepak Prajapati 32, Titanium, Prahaladnagar Corporate Road, Satellite, Ahmedabad - 380 015 Cell: +91-9099028864 Tel: +91-79-4026 5656 E-mail: [email protected] BENGALURU Mr. V Pradeep Kumar Unit No. 1101-1102, 11th Floor, Prestige Meridian II, No. 30, M.G. Road, Bangalore - 560 001. Cell: +91 98407 54521 Tel: +91-80-4115 0445, 4165 4529 Email: [email protected] CHANDIGARH Mr. Anand Jha SCF No. 54-55, First Floor, Phase 11, Sector 65, Mohali - 160062 Chandigarh Cell: +91 85111-53511/99251-42264 Tel: +91- 0172-490-4000/01 Email: [email protected] CHENNAI Mr. V Pradeep Kumar Unit No. O-509/C, Spencer Plaza, 5th Floor, No. 769, Anna Salai, Chennai - 600 002. Cell: +91 98407 54521 Tel: +91-44-2849 7812 / 0811 Email: [email protected] COIMBATORE Mr. V Pradeep Kumar T-3, 3rd Floor, Manchester Square
Puliakulam Road, Coimbatore - 641 037.
Tel: +91-422-4332399 / 4502399
Email: [email protected] HYDERABAD Mr. Ramesh Bob 401, Ashoka Scintilla, 3-6-502, Himayat Nagar, Hyderabad - 500 029. Cell : + 91 90520 00521 Tel: +91-40-4010 2030 E-mail: [email protected]
JAIPUR Mr. Nikhil Soni 304, Pashupati Akshat Heights, Plot No. D-91, Madho Singh Road, Near Collectorate Circle, Bani Park, Jaipur - 302 016. Cell: +91 – 95490 33222 Tel: +91-141-402 0213 / 14 E-mail: [email protected] KOLKATA Ms. Priti Agarwal 3rd Floor, Prasad Chambers, (Shagun Mall Bldg.) 10A, Shakespeare Sarani, Kolkata - 700 071. Cell: +91-98319 67110 Tel: +91-33- 4018 1600 E-mail: [email protected] NEW DELHI Ms. Swati Agrawal 13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi - 110 055. Cell: +91-98117 45677 Tel: +91-11-4533 3200 E-mail: [email protected] PUNE Mr.Pratim Banerjee 9th Floor, Pride Kumar Senate, Plot No. 970, Bhamburda, Senapati Bapat Road, Shivaji Nagar, Pune - 411 015. Cell: +91-98361 07331 Tel: +91-20- 4000 9000 E-mail: [email protected]
CIN - L67190MH1993PLC071691