HDFC Shares Surge Over 7% Even As Net Profit Slumps 28% YoY: Here’s Why

Housing finance company HDFC in its earnings results for the quarter ended September released today posted a 27.5 percent YoY decline in net profit at Rs. 2870.12 crore. In the corresponding quarter a year-ago, the company made a net profit of Rs. 3961.5 crore.

HDFC Shares Surge Over 7% Even As Net Profit Slumps 28% YoY: Here’s Why

The decline in profit is less than street estimates of more than 50% as the company gained from stake sale in HDFC Life during the period under review. "The Corporation has sold 26 million equity shares of HDFC Life Insurance Company Limited (HDFC Life) resulting in a pre-tax gain of Rs 1,240.59 crore," the management said in a filing to the exchanges.

Net interest income or NII at the housing financier stood at Rs. 3647 crore, up 20.7% year-on-year from 3,021 crore. Net interest margin or NIM however stood steady at 3.3 percent. Total income at the firm stood at Rs. 11732.7 crore, falling 13% on a year to year basis from 13,494.12 crore reported in Q2FY20.

The company's pre-tax profit fell 22 percent YoY to Rs. 3,531.78 crore versus Rs 4,530 crore in the same period a year ago. While, sequentially also there came in a log of 2 percent from Rs. 3,606.83 crore.

HDFC made provisioning to the tune of Rs 436 crore in the September quarter of FY21.

HDFC Stock price reaction on Q2Results

After the results, stock of HDFC surged over 7 percent to day's high price of Rs. 2065 per share on the BSE. This is as the investors' cheered better numbers that beat street estimates that anticipated a higher fall in net profit YoY for the September ended quarter of 54 percent. Also, the net interest income (difference in interest earned from loan accounts to that given on deposits) at the NBFC firm stood strong logging an increase of over 20% y-o-y.

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