Housing Development Finance Corp. Ltd’s (HDFC) loan book continues to grow in the high double-digits, thanks to the government’s thrust on affordable housing. On assets under management (AUM) basis, the mortgage lender’s loan book grew 18% in the June quarter. Individual loans, which comprise 72% of its overall AUM, rose 25%, and the non-individual loan book gained 18%.

During the quarter, 37% of home loans approved in volume terms and 19% in value terms were towards the economically weaker sections and low-income group. This translated into healthy net interest income growth of 20% on a year-on-year basis.

Consequently, HDFC reported 54% year-on-year increase in profit at 2,190 crore for the June quarter. It should be noted that non-banking financial companies are required to report earnings as per Indian Accounting Standard from FY19 onward.

As for asset quality, the gross non-performing loan ratio inched marginally higher on a sequential basis to 1.18% from 1.11% in the March quarter. Spreads were stable at 2.28%.

Meanwhile, the HDFC stock touched a 52-week high of 2,052.95 in intraday trading on NSE on Monday ahead of the earnings, but ended the day’s session down 1.53%.

However, according to some analysts, HDFC’s earnings have largely been in-line with expectations and this correction comes after the sharp-run up recently witnessed in the stock. One should not read too much into it. In the past few days, the stock has been on an upward trajectory given the robust response to group firm HDFC Asset Management Co. Ltd’s initial public offering, they said.

On a year-to-date basis, the HDFC stock has posted 18.6% returns surpassing Nifty’s 7.5% returns during the same span. On the valuation front, the stock is trading at a one-year forward price-to-book of 4.56 times, but the results suggest the premium is well-deserved