HDFC shares fall over 3% on one-time provision of Rs 450 cr

Shares of Housing Development Finance Corp (HDFC) today fell over 3 per cent in morning trade on bourses after the company said it will make a one-time provision of Rs 450 crore in the quarter ended March 31.
Shares of HDFC opened on a weak note at Rs 1,102.00, then fell 3.09 per cent to an early low of Rs 1067.00 on the BSE.
Similar movement was seen on the NSE as well, where the stock opened at Rs 1,100, then fell to an intra-day low of Rs 1,065.50, down 3.31 per cent from its previous closing price.
"With the objective of further strengthening its balance sheet, the corporation believes that it will be prudent to utilise a part of the exceptional gains to built an additional buffer against any unexpected risk in the future," HDFC said in the filing.

The corporation proposes to make an additional one-time special provision of Rs 450 crore during the quarter ending March 31.
Meanwhile, Morgan Stanley in a research note said that the additional provision is expected to strengthen the balance sheet.

HDFC has clarified that this special provision is being done voluntarily and not on account of any regulatory requirement and that the provision is on standard assets and the company holds adequate security in respect of all loans.
Morgan Stanley said this implies that "asset quality was stable in fourth quarter of the FY16."
The filing added that HDFC has made profit of Rs 1,520 crore (net of tax Rs 1,220 crore) compared to Rs 225 crore in the corresponding quarter in the previous year and profit includes the profit on sale of shares in HDFC Standard Life Insurance to Standard Life in the last financial year.

On April 1, HDFC in a regulatory filing had said that it has completed 9 per cent stake sale in HDFC Standard Life Insurance Company to its British joint venture partner Standard Life for a little over Rs 1,700 crore.
"Pursuant to the receipt of the requisite approvals, the Corporation has completed the transfer of the said shares," HDFC had said.