Housing Development Finance Corp. Ltd’s (HDFC’s) September quarter earnings met analysts’ estimates on key fronts. Stand-alone net profit grew 25% from a year ago to 2,467 crore, slightly exceeding the 2,431.7 crore estimate from Bloomberg’s poll of 15 analysts. Profit from the sale of investments that rose to 1,000 crore against 63.1 crore reported in the year-ago quarter aided its overall performance. This component includes 891 crore from HDFC Asset Management Co. Ltd’s initial public offering.

Asset quality was stable and net interest margin (NIM) improved to 3.5% from 3.4% in the previous quarter. It should be noted that non-banking financial companies started reporting earnings as per the Ind-As format in the June quarter and NIMs have been calculated as per the new accounting standard.

HDFC’s total loan book grew 17% to 3.79 trillion, with the individual loan book growing 18%. The mortgage lender’s thrust on affordable housing continues and loan growth is driven by home loans to individuals belonging to the economically weaker and low-income groups.

During the half-year ended 30 September, 37% of home loans approved in volume terms and 18% in value terms have been to customers from these two categories. On an average, HDFC has been approving 8,300 loans on a monthly basis to these segments, with monthly average of such approvals at approximately 1,354 crore.

As for non-individual loans, as the alongside chart shows, the segment has grown at a comparatively slower pace and is at a multi-quarter low.

Although the non-individual book is more margin-friendly, the capital required here is higher than individual loans and so is the risk factor. And considering the ongoing liquidity-related concerns in the industry and slowdown in the real estate sector, it looks like the mortgage lender may be adopting a cautious approach here.

Meanwhile, ahead of its September quarter earnings, the HDFC stock surged nearly 6% on Wednesday on the National Stock Exchange. However, following the results, the stock ended Thursday’s session down 0.41% at 1,762.

As for valuations, the HDFC stock trades at a one-year forward price-to-book multiple of four times, which is all right, given its stable fundamentals.