Industry Overview : Home or house is basic Need of any human. Also it is one of the indicator of the person and his financial independence and security.
Real estate and housing Finance sector also plays key role in Economy. There are many things need for development of home and That is why investment in housing finance or Real estate is investment in broad economy and its consumption.
In recent time the situation is there is big inventory being ideal. There is demand also but in some cities. Big factor is Indian people assume it as investment also.
As India is emerging market, the demand for housing finance is very big. Emerging middle class is big consumer for the housing market. Big part of India is young they need their own house and their emerge the need of housing finance.
HDFC is leading institution in the segment.
Company overview : Housing Development Finance Corp, Leading Housing Finance company, promoted in 1977. It was first specialise Mortgage Finance, Promoted by Industrial Credit and Investment Corporation of India. HDFC has turned the concept of housing finance for the growing middle class in India.
The company’s main business is to provide home Loan for purchase or construction of house, commercial, Real Estate. HDFC sales Pvt Ltd, wholly owned subsidiary of company, sell the product of the company. The company also has offices in Dubai London and Singapore and service associates in the Middle East region to provide housing loans and property advisory services to non-resident Indians (NRIs) and persons of Indian origin (PIOs). The network of HDFCBANK also help them as there is contract in-between both for selling home Loan of HDFC. The company also one of the First institution to receive in principle approval from RBI for Private Bank. The company also operate in other activities include life insurance, general insurance, asset management and others. The company operates in insurance segment through HDFC Standard life insurance through which life insurance products. The company through its subsidiary HDFC ergo. It offers insurance products, such as motor, health, travel, home and personal accident in the retail division, and customized products, such as property, marine, aviation and liability insurance in the corporate division. It also provides portfolio management, mutual fund, property investment management, project management, investment consultancy and property related services.
HDFC’s product range includes loans for purchase and construction of a residential unit purchase of land home improvement loans home extension loans non-residential premises loans for professionals and loan against property while its flexible repayment options include Step Up Repayment Facility (SURF) and Flexible Loan Installment Plan (FLIP).
The company’s subsidiaries include
- HDFC Developers Ltd
- HDFC Investments Ltd
- HDFC Holdings Ltd
- HDFC Trustee Company Ltd
- HDFC Realty Ltd
- HDFC Property Ventures Ltd
- HDFC Sales Pvt Ltd
- HDFC Ventures Trustee Company Ltd
- HDFC Venture Capital Ltd
- HDFC Ergo General Insurance Company Ltd
- HDFC Standard Life Insurance Company Ltd
- GRUH Finance Ltd
- HDFC Asset Management Company Ltd
- HDFC Bank Ltd.
Financials and Ratios
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
Loan Book 101774.33 127426.14 152448.43 178201.58 204245.15 235539.27
Book Value 118.05 128.76 160.57 179.14 196.67 215.98
RoE 20.41 21.67 19.52 19.46 19.34 20.78
ROA 2.53 2.46 2.48 2.30 2.35 2.45
Efficiency (%) 3.5 3.06 3.23 3 3.17 4.76
EPS (₹) 23.66 27.54 31.45 34.62 37.78 44.10
Dividend per Share 9 11 12.50 14 15 17
Net NPA to Loan Book 0 0 0 0 0 0
Future Prospects : It is company with very good quality management. All of them know their business. That is why they are leader in so many businesses.
Insurance business is growing and have big potential in India. Asset Management and portfolio management business is also low penetrated but growing as investors education is taking place.
Though Housing Sector is Going through pain but it seems that the sector is coming out from it. Interest rates are coming down and seventh pay commission may proves the boost for the housing Sector.
In any case the company will perform better in future as the subsidiary GRUH Finance also expect to perform better.
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