Gruh Finance

HDFC’s 59.15% subsidiary Gruh Finance posted good numbers for Q3FY15. Total income rose 25% (YoY) at Rs.271 crore and it ended the quarter with a net profit at Rs.45 crore, up 28%. Operating costs rose 26% but as a percentage of revenue earned it remained constant at 75%. PBT was at Rs.67 crore, up 20%. Deferred Tax liability on Special Reserve was at Rs.5 crore.

Asset quality has improved. Gross non-performing assets (NPAs) were Rs.48.17 crore (0.57% v/s 0.38% sequentially of loan assets) and net NPAs at Rs.5.50 crore, which has risen marginally from nil to 0.07%. Loan assets increased from Rs 6545 crore to Rs 8382 crore, up 28%.

The company was originally known as Gujarat Rural Housing Finance Corporation and was set up by H T Parekh, founder of HDFC and uncle of Deepak Parekh. It was set up to provide loans to the economically weaker in the society. Financing homes in rural areas with a population of around 50,000 accounts for 48% of Gruh’s business while rest comes from financing homes in urban towns. This is one sector, low-income financing which is seeing intense competition but Gruh is much ahead of the race and like HDFC has carved a name for itself. With the current sops given in the Budget for affordable housing, competition for companies like Gruh and LIC Housing, from new banks is a new challenge.