Another disappointment from one of India Inc?s blue-chips. This time, it?s home loan major HDFC, whose net profit of Rs 695 crore for the three months to June 2010, hasn?t been good enough for investors.

Also, the 23% rise in profit came not from interest on loans, which was more or less flat, but because the company paid lower interest on some borrowings. Nevertheless, it would seem that the business is on track because not only did HDFC disburse 25% more, it also approved many more loans—up 30%–during the quarter. However, there?s likely to be keen competition in the mortgages space, both from private and public sector banks, so it?s going to get tougher for HDFC to grow the business. Also, it?s not clear immediately how higher real estate prices are going to impact consumer sentiment in the metros. Consumers however, are not shying away from buying cars which is why battery-maker Exide has managed to grow is top line by 27.5% year-on-year and expand its operating margins sequentially by about 180 basis points sequentially to just under 23%. Indeed, with the economy growing at a fast clip, Axis Bank has turned in a strong set of numbers although the net interest margin (NIM) fell sequentially by about 40 basis points because banks are now paying more for savings accounts and also setting aside more cash with the central bank. The bank?s loan growth was nearly 40%. A strong economy has also helped revive the fortunes of Hotel Leelaventure, whose revenues were up a fairly good 25% year-on-year on the back of better occupancies of 64% and better room rates. The rebound in operating margins which expanded 780 basis points year-on-year to around 29% was quite remarkable, though in the past the chain has commanded far better profitability. However, it needs to get rid of some of its debt of close to Rs 2,500 crore that is weighing down the balance sheet, which it?s trying to do by selling some non-core assets. Indeed, in an interesting trend noticed by bankers, companies have decided not set up new capacities and increase leverage, at a time when the recovery globally is expected to be delayed, but instead try and outsource capacity that may already exist in the system. That?s one reason bankers that bankers attribute to the fact that there hasn?t really been a broad market credit pick up yet and most of the investments are being made in infrastructure projects. Nonetheless, both companies and individuals are no doubt more willing borrowers these days. During the fortnight to July 2, 2010, non-food credit grew a strong 22% plus even if some of it was on account of payments to the government for BWA licences. So while the environment seems to be conducive to growth the only worry is the high rate of inflation which came in at 10.55% for June. The bigger shock, however was that the numbers for April were revised to 11.2%. It?s no longer only food inflation that is worrying but more the non-food manufacturing inflation which has been rising steadily, that?s of concern at 7.3% for June. Since the April number was revised by 200 basis points to 8%, it?s possible the numbers for May and June too would be revised upwards. At this rate, the Reserve Bank will have little choice but to make money more expensive later this month.