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1 CARE Ratings Limited
Press Release
Housing Development Finance Corporation Limited
February 15, 2018
Ratings
Facilities Amount
(Rs. crore)
Rating Rating Action
Long Term Bank Facilities 3,582
CARE AAA; Stable
(Triple A, Outlook: Stable)
Reaffirmed
Short Term Bank Facilities 19,973.99
(increased from 13,884.08 )
CARE A1+
(A One Plus)
Reaffirmed
Total 23,555.99
(reduced from 25,234.78)
(Rupees Twenty Three
thousand five hundred fifty five
crores and ninety nine 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 453 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% (net of loans sold) (y-o-y) during FY17 to Rs.2,96,472
crore as on March 31, 2017. As on December 31st 2017 outstanding loan portfolio grew by around 19% (y-o-y)
to Rs. 342136 crore.
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Press Release
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 December 31st, 2017, HDFC reported Total CAR and Tier I CAR
of 16.90% and 14.5% respectively. Whereas, as on December 31st, 2017, HDFC’s gearing levels stood at 6.63x.
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, 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 December 31st, 2017, HDFC’s GNPA and NNPA ratio
stood at 1.15% and 0.77% 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.
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Press Release
Consistent healthy financial metrics
HDFC’s outstanding loan portfolio grew by around 14.60% (net of loans sold)(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.:73%]
with the rest mainly comprising loans to the corporate bodies/ developers.
HDFC’s registered healthy growth of 11% in PBT (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 9MFY18, HDFC reported net profit of Rs.9,327 crore over total income of Rs.25,598
crore. As on December 31st, 2017, HDFC Ltd ROTA stood at 3.57%.
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’s Policy on Default Recognition
Non-Banking Finance Companies
Financial ratios - Financial Sector
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 453 outlets (including 140 offices of its distribution subsidiary –
HDFC Sales Private Limited) as on December 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.
4 CARE Ratings Limited
Press Release
Brief Financials (Rs. crore) FY16 (A) FY17 (A)
Total operating income 29257 32111
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
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: 022-6754 3421
Mobile: +91 9004607603
Email: [email protected]
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.
5 CARE Ratings Limited
Press Release
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
Term Loan-Short Term
- - - 19973.99 CARE A1+
Term Loan-Long Term - - - 3582.00 CARE AAA; Stable
6 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
- 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 19973.99 CARE A1+
1)CARE A1+ (06-Dec-17) 2)CARE A1+ (29-Sep-17) 3)CARE A1+ (10-Jul-17) 4)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 (06-Dec-17) 2)CARE AAA; Stable (29-Sep-17) 3)CARE AAA; Stable (10-Jul-17) 4)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)
-
7 CARE Ratings Limited
Press Release
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CIN - L67190MH1993PLC071691