HDFC's standalone Q1 net profit drops by 17% yoy; to issue bonds worth Rs 35,000 crore

Key Highlights: 

• HDFC standalone net profit declines by nearly 17% in Q1
• Boards approves merger with five wholly-owned associates
• Board approves raising up to Rs 35,000 crore of NCD via private placement

Housing Development Finance Corporation (HDFC) missed analysts estimates by witnessing nearly 17% year-on-year decline in its standalone net profit for the first quarter ended June 30, 2017. 

The company posted net profit of Rs 1,556 crore, a drop of 16.83% compared to net profit of Rs 1,871 crore in the corresponding period of the previous year. 

Explaining the decline in Q1 earnings, HDFC stated that the company sold shares of HDFC ERGO general insurance company to ERGO International AG - a subsidiary of Munich Re for a consideration of Rs 922 crore and has also created a one-time special provision of Rs 275 crore as a charge to the statement of the profit and loss. 

After the adjustment, HDFC's profit before tax represented a growth of 15% in June 2017 over the corresponding quarter of the previous year. 

Effective tax rate for Q1FY18 was higher at 34% compared to 30.7% a year ago same period - due to stake sale of unlisted shares of HDFC ERGO. 

Standalone Q1FY18 net profit also declined by 23.89% from Rs 2,044.20 crore of the preceding quarter. 

A Bloomberg poll estimated standalone net profit at Rs 1,770 crore for HDFC this Q1. 

Standalone total income stood at Rs 8,141.76 crore, registering decline of 2.99% year-on-year (YoY) and 4.37% quarter-on-quarter (QoQ) basis. 

On consolidated-front, net profit was at Rs 2,733.87 crore down 2.25% yoy and 11.21% qoq. While total income was at Rs 14,463.01 crore which was up 6.88% yoy but down 19.83% qoq. 

Further, HDFC informed that the board of directors at the said meeting has also granted its approval  for issuing of secured redeemable non-convertible debentures (NCD) aggregating up to Rs 35,000 crore on a private placement basis under a shelf disclosure document in terms of the Sebi. 

Also, the board has approved the composite scheme of amalgamation for the merger of 5 wholly owned subsidiarues namely Grandeur Properties Private Limited, Winchester Properties Private Limited, Pentagram Properties Pvt Ltd, Windemere Properties Pvt Ltd and Haddock Properties Pvt Ltd.

This scheme is awaiting approval of the National Company Law Tribunal (NCLT). HDFC said, "The effect of the amalgamation on the financial statement will be reflected in the period in which the requisite approvals are received.