Gruh Finance : Another Round Of Good Results

The high interest rate regime has put the realty markets in doldrums. The spillover effect of this can be seen on the performance and state of affairs of the housing finance companies as well.  The slower sales volumes of Realty players would naturally and eventually mean lower growth for the housing finance companies too. The overall scenario is that net interest margins have come under pressure and the non performing assets are on the rise. However, even in such a difficult scenario Gruh Finance has delivered a strong set of numbers for the December quarter of 2013.

For the quarter under review, the company has posted a bottomline of Rs 35.24 crore as against Rs 28.89 crore it posted during the corresponding quarter of last year. The best part has been that the company has managed to show growth on a sequential basis as well.

It has seen a good growth in disbursements, which during the 9MFY14 totaled to Rs 1824.74 crore as against Rs 1490.71 crore during the corresponding period last year. It amounts to a growth of around 22 %. This is higher than the industry average which is below the 20% mark. Even LIC Housing Finance Company could manage only a 20% growth during the similar period.

While disbursements are happening at a good pace, the important factor is the asset quality of the company. Its gross NPAs stood at Rs 29.93 crore (0.46% of the loan assets) as against Rs 26.74 crore (0.54% of loan Assets) in December 2012. The increase in gross NPAs is indicating higher slippages. In the first quarter of FY14 the management had stated that, it would try to keep the Gross NPA’s below the 0.40% level. Efforts put in by the company in that direction may pay off in the next quarter. However, the company has been very conservative and has always maintained its Net NPAs at Nil level. It is yet to provide the net interest margin figures. We would update our readers as and when the figures are made available.

Overall the performance of the company has been very good and it justifies the scrip trading at its 52 -week high levels. We have already recommended the counter to our readers in our recent New Year portfolio and reiterate that investors hold the counter for further gains going ahead.