INSUBCONTINENT EXCLUSIVE:
Housing finance companies never had it so good
Supportive policy framework and more disposable income are creating a perfect mix for them
And investors are in a state of awe
The segment has already brought out many multibaggers over the past 5-10 years
Still, analysts give a big thumbs-up to HFCs, considering the promise the sector shows.
Let's check the factsheet
Indiabulls Housing Finance has surged nearly 350 per cent since its listing on July 23, 2013
Except some private lenders, housing finance companies have delivered far superior returns compared with banks
For instance, share price of Dewan Housing Finance jumped over 550 per cent during April 9, 2013, and April 9 this year
Repco Home Finance, LIC Housing Finance and HDFC soared 140-260 per cent during the same period
On the other hand, IndusInd Bank, YES Bank, Kotak Mahindra Bank, HDFC Bank, Federal Bank and Axis Bank rallied anywhere between 100-380 per
cent.
During the last five years, players such as Indiabulls Housing Finance, PNB Housing Finance and Dewan Housing Finance have grown much
above the sector average, translating into market share gains
However, HDFC has retained its market edge in housing loans despite competition from banks and other HFCs.
Continued policy initiatives with
focus on affordable housing, supportive demographics in terms of a growing working age population and urbanisation are all giving the
finance companies (HFCs) because we feel that the housing market is at its bottom and the only way it can move from here is on the upside
and the housing finance companies will be one of the key beneficiaries
space is dominated by lenders such as SBI, ICICI Bank, Axis Bank and a handful of HFCs like HDFC, LIC Housing, Indiabulls Housing and Dewan
These players accounted for 56 per cent of total housing loans in India.
A report by SBICAP Securities showed that the mortgage to GDP
ratio, a widely used metrics to map mortgage penetration, reveals that the Indian mortgage market is still under-penetrated in comparison to
The brokerage house expects the ratio to improve to 12 per cent by 2022 from 9.40 per cent in FY17
Not just that, the market share is seen to go up for these HFCs on the back of incrementally faster growth rates.
Their market share also
offers a tell-all picture
It has improved significantly compared with the overall banking sector over the past 10 years till FY17
Even housing loans are in the pink of health
Outstanding housing loan stood at Rs 14 lakh crore as of FY17, which were serviced by all major players
Banks -- both public and private -- disbursed around 60 per cent of housing loans, with State Bank of India leading the pack.
Talking about
growth, HFC loan to individual portfolio has grown at a CAGR of 22 per cent over FY12-17 while the corresponding figure for Scheduled
Commercial Banks (SCBs) came in at 17 per cent, leading to sectoral home loan portfolio growing at 19 per cent per annum, the SBICAP
prime lending rate (PLR) for the first time since December 2013, marking a shift in the interest rate trajectory
It also has buy call on Dewan Housing Finance (target price Rs 820), PNB Housing Finance (Rs 1,500) and LIC Housing Finance (Rs 685)
It held that the business of PNB Housing Finance is highly scalable with reasonable return ratios
