Housing finance shares rally; LIC Housing, Indiabulls Housing hit new highs

Tata Value Homes, a subsidiary of Tata Housing, develops affordable housing projects across the country with over 40 million square feet under development
Shares of housing finance companies (HFCs) have rallied up to 8% on the BSE in otherwise range-bound market on the back of heavy volumes.

Housing Development Finance Corporation (HDFC), LIC Housing Finance, Dewan Housing Finance Corporation (DHFL), Can Fin Homes, GIC Housing Finance and Indiabulls Housing Finance were up between 3% and 8%. By comparison, the S&P BSE Sensex was flat at 29,904 levels at 03:09 pm.

LIC Housing Finance, Indiabulls Housing Finance and Can Fin Homes hit their respective record highs on the BSE in intra-day on Tuesday.

According to analysts at Motilal Oswal Securities, the mortgage markets are in hyper competitive mode which is leading to moderation in retail loan segment. Despite this, with softening interest rates and improving home affordability, this segment is expected to grow at 15% CAGR (compound annual growth rate) over the medium term.

Can Fin Homes, the largest gainer among HFCs pack, was up 8% to Rs 2,830 on BSE. LIC Housing Finance has rallied 6.6% to Rs 712 on BSE in intra-day trade.

While LIC Housing Finance has been growing at a decent pace of 15% YoY, much of the incremental growth is now coming from non-core business (loan against property or LAP and builder financing). Analysts believe growth in these segments is necessary to sustain spreads.

Indiabulls Housing Finance too up 5% to Rs 1,017 on BSE. Analyst at CLSA believe Indiabulls Housing Finance will be a key beneficiary of the rise in demand for mortgages as it leverages an improved funding profile, network expansion and lower market share.

Meanwhile, Housing and Urban Development Corporation Limited (HUDCO’s) initial public offering (IPO) will hit the markets on May 8.

HUDCO is a wholly-owned Government company with more than 46 years of experience in providing loans for housing and urban infrastructure projects in India. The government will dilute 10.13% (204 million shares) stake in the housing and urban infrastructure financer in the IPO as a part of its 2017-18 disinvestment programme. The price band for the IPO has been set at Rs 56-Rs 60 per share. Retail investors and employees are being offered a discount of Rs 2 per share on the issue price.

COMPANY LATEST PREV CLOSE GAIN(%)
CAN FIN HOMES 2829.95 2615.75 8.2
LIC HOUSING FIN. 707.50 668.40 5.9
INDIABULLS HOUS. 1070.35 1016.65 5.3
DEWAN HSG. FIN. 446.65 427.75 4.4
CORAL INDIA FIN. 248.90 238.45 4.4
GIC HOUSING FIN 517.40 501.25 3.2
H D F C 1583.75 1537.05 3.0