At a time when many non-banking finance companies (NBFCs) find it difficult to raise resources from the market, the 42-year old housing major HDFC Ltd, managed by chairman Deepak Parekh, has had a smooth sailing.
The reason being its uninterrupted track record of profitability with lowest non-performing loans. In the current credit squeeze in the market, HDFC remained unscathed because it stayed away from certain segments of commercial real estate market and also short-term funds to grow long-term assets.
The last two debt issues by the Mumbai-headquartered HDFC sold like hot cakes thanks to big money on the table by a single investor. The private sector bank Axis Bank emerged as the largest investor in the two debt issues by the HDFC over the last one month.
In the Rs 2,550-crore offering of HDFC that took place in the last week of December, the private sector bank acquired close to 95 per cent of the issue. The bank invested Rs 2,415 crore for three years at an interest rate of 7.21 per cent. The other investors were Punjab National Bank , Karnataka Bank Sundaram Mutual Fund and NABARD. The housing regulator NABARD put Rs 50 crore from its pension fund, while Sundaram's equity Hybrid invested Rs 10 crore. PNB and Karnataka have invested Rs 50 crore and Rs 25 crore , respectively.
Out of the Rs 3,180 crore issued by the housing major over the first week of January, Axis bank subscribed for Rs 2,305 crore, over two-third of the total amount available in the market. The remaining issue was shared by SBI Life insurance, DSP Mutual Fund, Army Group Insurance, Shriram General Insurance, Bharti Axa General Insurance and Barclays Bank etc.
Currently, debentures and securities contribute almost 47 per cent to the borrowings of the HDFC Ltd. The total borrowings are at Rs 3.88 lakh crore as on September 30, 2019. The deposits from public constitute 32 per cent. Banks are the third largest source with 17 per cent share and external commercial borrowings constitute 4 per cent. The housing major has always tapped the right opportunities for diversification in the market via raising resources through ECBs and masala bonds. "Our strength has been our ability to seamlessly straddle between wholesale and retail funding. As they say, little by little, a little becomes a lot," said chairman Parekh to shareholders in the last annual general meeting.