Keki Mistry: In The Elite Class
Instrumental in driving HDFC to the position it holds as India’s largest premier housing-finance company, is Keki Mistry, HDFC’s vice-chairman and CEO. Mistry has had a huge role in transforming HDFC into a financial-services giant with interest in banking, life insurance, general insurance and asset management. Little surprise, then, that Mistry is among BW Businessworld’s Most Valuable CEOs.
A chartered accountant, Mistry joined HDFC in 1981 and rose up the ranks. His numerical and financial acumen led to his eventual induction on the HDFC Board as executive director. He is now the key man in HDFC, looking after its huge treasury and finance functions, and providing leadership to the group.
Under Keki, HDFC had one of the best growth in earnings over the years, with the business net profit registering 19 percent growth over the last 16 years. HDFC has been among the pioneers of housing finance in the country, now with more than Rs 3.2 trillion in assets.
The housing finance business is generally more stable; housing loans are typically less expensive than other loans. Still, the key to profitability is to raise money at lower and lower rates in order to render housing finance affordable and still keep profits swelling. Mistry played a key role in this function, which is why HDFC enjoyed high returns on equity — over 20 percent for several years.
With his eye on the figures, Mistry’s acumen has proven itself in the deployment of excess cash-flows generated by the housing finance business to seed and spawn other high-growth businesses. This has paid off generously for the group. An Ambit research report estimates that over the years HDFC earned a 36 percent internal rate of return on capital employed in various ventures such as its bank and insurance firms.
Says Keki Mistry, vice chairman and CEO, HDFC: “There is so much of value in our subsidiaries today. By our reckoning, the unrecognized profits on our investments today would be close to $28 billion till date.” Now HDFC’s is among the top groups in the country with a market value of Rs 9.33 lakh – and rising.
As the first housing finance company in India, HDFC had a lot on its shoulders developing and formalising the housing finance business. Now there are about 100-odd operators in housing finance, a large number attracted to this sector industry given its low non-performing assets and high return on equities. HDFC enjoyed high returns on equity of over 20 for nearly two decades.
In the last few years, keen competition in housing finance has been the order of the day. Even then, the conglomerate continues to register stellar growth. In 2018, the consolidated HDFC reported 49 percent profit growth, to Rs 16,255 crore, against Rs 11,051 crore in fiscal 2017.
Another reason for the superior growth rates is that HDFC has a sound brand reputation among HFCs for prompt service and speed to market. The housing finance company has a sturdy retail deposit franchise despite its low interest rates.
Last year, the HDFC re-appointed Keki Mistry as Vice-Chairman and CEO for three years. With nearly 37 years spent here, Mistry has seen it grow from a small company to a business with more than 400 branches and assets of Rs 3.37 lakh crore. Now the goal is even larger. “We have to create new businesses that will bring value in 5,10 or 15 years. We are looking at forays into stressed real estate, health insurance. Our vision is for the next 5 or 10 years, not the next quarter,” says Mistry.
