Keki M. Mistry, Vice Chairman and CEO, Housing Development Finance Corporation (HDFC) talks about the fundraising programme via QIP and warrants, loan growth, the strategy that will be adopted amid pandemic situation, stress pockets and expectations from the year among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts: 

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You have the plan to raise an amount through warrants and QIP. So, let us know how the proceeds will be utilized and the response that you got from the investors? Also, share the details of the QIP with us?
We took approval from the shareholders to raise capital up to Rs 14,000. We raised the money in two separate instruments the first was direct equity, which is like a qualified institutional placement (QIP) and was for Rs 10,000 crore and the second was an instrument, which was a debt cum warrant structure where the investor currently pays the warrant premium and then three years later as an option they come to us to buy a share of HDFC at a certain price. The issue was started last Wednesday at the closing price of Rs 1,776 per share and we launched the issue in the range of Rs 1,750 to Rs 1,760 per share and we finally closed the issue at Rs 1,760 per share which presents a 1 per cent discount to the price prevalent on that Wednesday. So, it was only a 1% discount to the closing price.

The response was very good and we got a fantastic response for the warrant as well as for the equity issue. If we talk about the warrant then I told you the closing price which was Rs 1,776 per share, so 10 per cent of that turns up to roughly Rs 180 per warrant was the warrant premium that was paid by the warrant holder. So, upfront we got Rs 180 per warrant coming close to Rs 307 crores. Along with the warrant came the debt that is an NCD and they have been finalized and we raised the NCD money also. The warrant holder has an option to come to us three years later and buy one share of HDFC at a price which is determined now, which is Rs 2,165 per share, which represents a 22% premium towards the closing price of the share on that Wednesday. So that is the issue.

The money will be utilized for the ongoing business and we will utilize it for both the organic growth and inorganic growth. I think in the mortgage business as the normalcy returns the demand for housing loans will keep increasing and therefore this money will be used for both organic and inorganic growth. As far as the inorganic growth is concerned then the money will be used just in the HDFC’s core business but also when opportunities come up in our subsidiaries. At the subsidiaries under regulation, any investment we will make in subsidiaries gets reduce from tier-1 category. While there is a lot of value, gain, upside which we have created in making these investments, the unrecognized gain on our listed investments on 30 June was Rs 1,92,151 crore, which is a very big sum of money. The investment we have made has reduced from tier-1 category therefore we raise capital that enhances the level of category.

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How was the loan growth in this quarter and what is the current composition of your individual and non-individual portfolio loans?
After 15 May there was a steady opening of the lockdown barring from city-to-city. In the case of Mumbai, the lockdown got over on 8 June even today in Mumbai we can operate with just 10 per cent of our staffs working from offices. So there are different cities and different markets. We couldn’t do in April and our disbursements barely stood at Rs 250-300 crore. I am talking about individual disbursements not non-individual. We opened the offices late in May, it was probably 18-20 May, so we disbursed about Rs 2,300 crores of loans. We got little satisfaction in June, we started seeing some pick-up and we disbursed around Rs 6,500 in the month, which is 68 per cent of what we were at in the last year’s June. July saw a very good response and we disbursed Rs 7,614 crore, which is 18% higher then what we did in June and was almost 81% of what we had achieved in July of the last year. So till July, we saw that every month the demand was increasing and the growth numbers were growing. So, we hope that the momentum we saw in the last three months, May, June and July, will continue.

Going forward what strategy will be adopted amid the concerns that emerged due to the pandemic situation? Also, tell about the segments/pockets where stress points are visible and how you will deal with it?
Our business is individual housing loan. It doesn’t concern us as we don’t lend to industries. We are lending money largely to individuals and all this number I am talking about is about individual disbursements. As far as non-individual loans are concerned then enough liquidity was available with us in April, May and June, we were sitting at almost Rs 32,000 crore of liquidity and we got opportunities, so we did a certain amount of non-individual lending. But historically our trend is always to have a focus on individual loans rather than on non-individual loans. 

How the full year, FY21, is likely to be and what can be the important highlights and how will you close the year this time?
This is too far away and I cannot comment anything on it. As I gave you the actual numbers till July, so clearly the momentum is building up and we have to just hope that the momentum will continue. My personal view is that every quarter is going to be better than the previous quarter, keeping our fingers crossed.