While the company did pass on the high cost of funds to borrowers to protect its profitability in the quarter, higher funding costs will make it difficult for the firm to maintain its margins.
In addition, the issues impacting the real estate sector, too, will have a bearing on the performance in future. The asset quality of Indiabulls Housing’s corporate mortgage portfolio is a key monitorable, said an analyst at a domestic broking house.
Of the total loan book size, 17 per cent is accounted for by real estate developer or corporate mortgage loans. Gross bad loans were, however, stable at 0.88 per cent as of March 2019.
This apart, the Reserve Bank of India’s decision on the Indiabulls Housing-Lakshmi Vilas Bank merger is another key event.
Analysts, however, believe that this may not come about, given the RBI’s track record on licence approval for entities with interest in real estate and capital markets. For now, analysts advise investors to stay away from NBFCs and look at private banks instead.