Gruh Finance

Home loan financer & 58.64% subsidiary of HDFC Ltd., Gruh Finance reported a healthy 4.6% QoQ growth in loan assets to Rs. 9.329 crore with income from operations at Rs. 294 crore, down 4% sequentially but up 22% as compared to first quarter of the previous year. Net interest income for the first quarter came in at Rs. 104 crore while net profit was Rs. 50 crore, leading to EPS of Rs. 1.38.

Although company has charged Rs. 11.8 crore towards provisions, this is generally part of its conservative accounting practice. In Q1FY15 too, an amount of Rs. 11.88 crore was provided towards contingencies, while for FY15 finally, Rs. 15.69 crore was the total provision for contingencies charged to P&L for whole year. Gross NPA and net NPA stand at 0.52% and 0.15% respectively, as of 30-06-15, which is again within comfortable limits, although little off from 31-03-15, when during year end, the final adjustments are made to make net NPAs nil.

At current BVPS of Rs. 21, share is trading at PBV multiple of 12 times, while PE multiple is about 37 times, based on expected FY16 earnings, which is line with the multiples at which the share has been trading historically.  The company continues to command premium valuations given its consistent financials and HDFC’s parentage.