DHFL Q3FY17 Concall Summary


Performance Highlights

 Results in INR Bn

  • Assets under Management grew by 19% YoY to Rs. 78,296 Cr as on 31st Dec, 2016
  • Total income increased 20 to 26% generating Rs. 2,367 Cr
  • NII increased to Rs 515 Cr growing by  21% Q3 in FY 16
  • NIM grew by 20 bps from 2.87% to 3.07% over Q3 FY 16
  • On Balance Sheet, loan book grew 17% over Q3 FY 16 to Rs. 68,961 Cr
  • PBT increased by 33% YoY to Rs. 372 Cr
  • PAT grew by 32% YoY to Rs. 245 Cr
DHFL Q3FY17 Key Ratios
  • Cost income ratio has declined at 250 basis point to 23.77% in this quarter as compared to 26. 36% in corresponding quarter in FY 16
  • Gross NPA has declined to 0.95% over last qtr
  • Loan sanctions and disbursement were Rs. 9,459 cr. and Rs. 7,069 Cr increasing 2% and 7% respectively for the qtr
  • igh ticket segment has shown decline but affordable housing segment having average ticket size is not much affected
  • Disbursement in mortgage is moderate
  • Housing Loan- home loan disbursal was good in T2 and T3 cities
  • New incentive program introduced for 9 and 12 lacs in affordable housing is expected to report steady growth
  • Mortgage loan and working capital loan for SME is doing well
  • SME loan business is growing steadily for the past years
  • Hand in hand with mortgage loan business with having good share at 2 % margin here and there
  • The Company is focused on Opex rationalisation. The Company stands good in cost to income ratio.
DHFL Q3FY17 Performance Highlights

Impact of Demonetization

  • Disbursement dropped by 12% as compared to October, 2016. But there was a good bounce back in disbursement and collection in December which resulted in 10% growth in YoY disbursement. Q4 is expected to be good in terms of collection.
  • Demonetisation slowed the pace but the management is confident that the last quarter will show growth.
  • The Company takes demonetization as opportunity not constraint.
  • Transactions were slow in NCR and West India including Gujarat, parts of MP and Maharashtra as money flow was less

LAP Portfolio

  • Massive rate cut by SBI and followed by others resulting yield to come down and reduction in cost of housing comes down. Still The Company manages NIMS to 295-305 basis point
  • In Q4, cost of borrowing trend is depicting low so, Q4 will be positive for business.
  • Instalment of home loan is 35 to 45 %.
  • Credit assessment on basis of reputed financials.
  • Surrogate program or liquid program in circulation till last year.
  • Home loan business grew at 15%, growth of 16 to 17% on LAP and overall retail to 15%.
  • The yield is 14-16 basis points, the Company insures to protect the margin.
  • Non- individual book has good margin.
  • The project finance business will be continuing.
  • The Company claims to have good pipeline in Q4

Expense Ratio

  • Cost to income ratio at lowest level in last three years.
  • The company has not taken benefit from RBI relaxation of 30 days DPD, December collection were as usual showing 97-98% efficiency.
  • The company has branch centric model.
  • The company focuses on low-middle sector.
  • The target income ratio is 21-21.5%.
  • Branch segmentation is on size and market. It usually takes 3 yrs to bench mark


  • Total book is of Rs. 10,000 cr out of which 10 to 15% will be for securitization

 Office building liquidation/Ads and legal expenses

  • Office building will effect to get money back and it get delayed due to demonetization
  • Ads cost Rs. 25.84 Cr
  • Legal and professional charge- Rs 11 Cr

Loan sanction increasing while Disbursement shows lower pace

  • Sanction increased marginal and also disbursement ratio was improved over October because the Company understands that the investors were looking for disbursement.
  • On month on month basis post Diwali, Nov over Oct was good.
  • Loan growth will be increasing by 17-19% as the Company had announced 9 lac and 12 lac program and also market size in 16 lac including metros to cover up

 Ticket Size

  • LAP- Rs. 40 to Rs 42 lacs
  • Project finance- Rs. 38 to Rs. 42 cr
  • Yield on LAP is at 13.55% - 13.75% while that on Project finance is at 15.45% - 16.2%

 Components for calculation of NII

  • Three components were included for calculating NII
    • MF operational income
    • Profit on interest
    • Dividend interest
  • Third party processing fee has been increased to 18 cr
  • Third party distribution income was Rs. 11 cr last qtr and same as this qtr.

Utilisation of Rs. 14,000 cr of retail bond

  • Rs. 9,000cr was utilised in business including Rs. 1,300 as repayment of banks.
  • Investment in duration fund yielding of 9.35% on entire treasury book
  • In project financing Company increase 14 to 15% as of now it is 11%. 

Non-Individual Asset movement

  • In non-individual loans the company collections are 97-98%, hence the is no stress  in this segment
  • Project and large financing is more profitable than individual loan business.

 Update on Preferential issue raising

  • Issuing preferential issue is to have more comfortable level of CAR and like to keep good Capital Adequacy ratio.

SME lending borrowers

  • Professionals like Doctor for medical equipments, hospital equipments, plant & machinery, Educational institution to set up their infra.

Future Outlook

  • Increasing focus on end customer segment and supply of affordable housing units
  • Faster growth envisaged in mortgage loan in metros and smaller cities
  • Company always want to grow loan to 16 to 18% on annual basis
  • Use of technology in improving process risk management and credit appraisal.
  • Affordable housing government programs on affordable housing has pushed in positive direction.
  • Regulation on Real Estate and demonetization will affect positively on affordable housing side and Company wants to become the financer of the first choice as per views pre and post demonetization Q3
  • Focus will be on growing home loan and project loan aggressively.
  • The Company plans to achieve target share of mortgages in double digit in overall loan book.
  • There is long term potential and focus is to create market dealership and offering customised product over a time.
  • Significant investment in last three years to drive network expansion and improve brand visibility.
  • Focus will be on efficiency improvement and technology led initiative.
  • Continued focus on LMI customer segment to drive growth.
  • Loan book growth to be driven by better utilisation of existing network