Top Housing Finance Shares in India 2024: Housing Finance Companies to Add to Your Watchlist

It's said that the housing finance industry has one of the most secure business models.

At a time when most banks didn't see the opportunity in housing credit, and shied away from lending to an unbanked population, these specialized housing finance players cashed in on the demand.

While their growth has been spectacular, housing credit in India is still less than bank credit.

The opportunity is huge. Housing finance, as a sector, will continue to grow. But with almost every bank and non-bank company taking a share of the pie, the space is now saturated.

Only few will make profits or sustain credit quality.

We've shortlisted the best quality players within this space using our powerful stock screener.

Read on as we look at the best housing finance stocks in India.

#1 HUDCO

First on the list is HUDCO.

The Housing and Urban Development Corporation, abbreviated as HUDCO, is an Indian public sector undertaking engaged in housing finance and infrastructure project finance.

The company was recently granted the prestigious 'Navratna' Status by the government in April 2024.

Being majorly owned by the centre, the company receives support in terms of board representation and access to low-cost funds.

Over the years, HUDCO has played a significant role in the implementation of its various initiatives in urban infrastructure and social housing projects.

The company's role has only become more important now as the Indian government is ramping up its focus towards infra and housing segments.

No wonder HUDCO shares have skyrocketed over 120% in the past 1-year.

Following a big boost from the Finance Minister in the Interim Budget 2024, HUDCO has been riding on several tailwinds and schemes to assist deserving sections of the middle class living in rented houses, slums, chawls, and unauthorised colonies in buying or building their own homes.

The biggest of it all was Rajasthan government's massive commitment of over Rs 1 trillion!

HUDCO has a MoU with Rajasthan government for providing financial assistance up to Rs 1 trillion in the next 5 years for housing and urban infrastructure projects.

Going forward, the company aims to increase its assets under management (AUM) to over Rs 1.5 trillion by the financial year 2026, up from the current Rs 840 billion (bn).

The company is focused on reducing funding costs, resolving stressed assets, and expanding and diversifying its loan portfolio.

HUDCO is also expanding internationally, and it recently secured borrowings in Japanese Yen from East Asian countries at lower rates, enhancing its lending competitiveness.

To know more, check out HUDCO's financial factsheet.

#2 LIC Housing Finance

Next on this list is LIC Housing Finance.

LIC Housing Finance is a housing finance company registered with the National Housing Bank (NHB).

It's one of India's oldest housing finance companies, however, has sustained a secure business model with a lion's share of its customers belonging to the salaried class, nearly half of whom are central government employees.

Low-risk retail home loan products form LIC Housing's core business.

The company is promoted by the state-owned Life Insurance Corporation (LIC) of India. LIC Housing benefits from its strong parentage and enjoys a strong brand recall among Indian consumers.

With the government keen on spurring growth in the housing sector, LIC Housing Finance is in a sweet spot.

Since the housing finance company enjoys the parentage of LIC, it is able to raise funds at cheaper rates due to strong credit ratings accorded to its borrowing programs. Besides, it has also been replacing bank borrowings with low-cost non-convertible debentures.

Coming to its financials, in FY24, the company saw improvement in its net interest margin from 2.4% in FY23 to 3.1% this year.

The company's net profit after tax came in at Rs 47.7 bn, a growth of 65% compared to the year ago period.

Going forward, the company remains optimistic about its asset quality and recoveries.

In the past 1 year, shares of the company have gained over 40%.

#3 PNB Housing Finance

Next on the list is PNB Housing Finance.

The company offers retail customers housing and non-housing loans, including individual home loans, loan against property, non-resident property loan, among others.

It is promoted by Punjab National Bank (PNB).

The company has a pan-Indian network of 94 branches across 64 cities and towns with assets under management (AUM) of over Rs 745 bn.

The borrowing mix of the company currently comprises 40.2% of term loans and 32.3% from deposits.

Shares of PNB Housing Finance were in focus last week following a large block deal where US-based private equity firm Carlyle sold its 13% stake.

In the past one year, the company's stock price has appreciated by 30%.

This could be a result of its NPAs coming in lower than expected. The company did see considerable recoveries from written-off accounts which contributed to reversal in credit cost.

The company's net profit in FY24 rose 25% YoY to Rs 4.3 billion (bn).

As part of its future plans, it's looking to open 40 more branches in the current year and focus on expanding in South, North, and West regions.

To know more, check out PNB Housing's financial factsheet.

#4 Aadhar Houusing Finance

Next on this list is Aadhar Housing Finance.

Specialising in mortgage-related loan products, Aadhar Housing Finance provides various options, including loans for purchasing and constructing residential properties, home improvement and extension loans, and loans for commercial property construction and acquisition.

The company operates as a housing finance company with a focus on the low-income housing segment.

Its clientele primarily consists of economically weaker and low-to-middle-income individuals in need of small-ticket mortgage loans.

Aadhar Housing Finance is one of the largest affordable housing finance companies catering to borrowers with loan sizes typically below Rs 1.5 million. This focus on a market segment with high demand and limited competition, positions the company for growth.

The company's financial performance has remained consistent and resilient through various external events in the Indian economy, such as demonetisation and the introduction of GST, etc.

The company came out with its IPO in May this year and raised somewhere around Rs 30 bn.

Since then, the stock price has remained rangebound.

Looking ahead, the company has plans to extend distribution network to achieve deeper penetration in key states.

Aadhar Housing Finance is committed to its strategy of targeting customers and expanding its customer base while simultaneously investing in and deploying digital and technology-driven solutions.

To know more, check out its detailed financials here.

#5 Aptus Value Housing Finance

Next on this list is Aptus Value Housing Finance.

In ace investor Sumeet Nagar's own words, Aptus Value has been both one of the most profitable financial companies in India and the fastest growing from a profit perspective.

The company essentially caters to housing finance needs of self-employed, informal segment of customers mostly belonging to middle and low income group, primarily from semi-urban and rural markets.

The company is one of the early private sector entrants in South India catering to affordable housing segment.

It follows a hub and spoke model where the hubs have technical and legal teams for all branches under the respective hubs.

For the financial year FY24, Aptus reported a net profit of Rs 6.1 bn on a total income of Rs 14.2 bn as against the profit of Rs 5 bn last year.

The company has reported strong and rising profitability over the past few years.

Since its inception over a decade ago it has had hardly any write-offs or losses, given the default that is supreme underwriting.

In the past 1 year, shares of the company have gained 16%.

With declining NPAs and improvement in collections, the company is hopeful of strong quarters this financial year.

Aptus is planning to add 35 to 40 branches in the current year, focusing on Telangana, Karnataka, Maharashtra, and Odisha. It already opened its first branch in Maharashtra.

To know more, check out the company's detailed financials here...

More Stocks in the Housing Finance Space

Apart from the above five players, there are several more looking to capture market share.

Some of them include -

• Aavas Financiers
• IndiaBulls Housing Finance
• Canfin Homes
• Repco Home
• GIC Housing
• SRG Housing Finance

Snapshot of Housing Finance Stocks on Equitymaster's Stock Screener

Here's a table showing how the above companies fare on multiple important metrics.

Please note that these parameters can be changed accordingly and filtered as per the user's needs.

In Conclusion

All being said, investors also need to consider the competitive nature of the industry.

The housing finance industry is one of the most competitive segments of the Indian economy, with the banking sector having a significant presence.

Housing Finance business is on an upward trajectory, due to growing economy, increased urbanization, government incentives, acceptability of credit in society and rise in nuclear families.

With the result, the housing finance industry has attracted lot of companies in the market thereby increasing competition to maintain/grow market share and profitability.

Banks have an edge over housing finance companies due to access to relatively low-cost funds raised through deposits. Therefore, with every drop in the interest rates, propelled by banks, housing finance companies will be forced to follow the suit, or they risk losing market share.

Nevertheless, the industry tailwinds are strong, and the market leaders could still be on the winning side... they'll be the first ones to benefit, followed by the laggards.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...