The Affordable Housing Boom Could Boost these 5 Stocks for Years to Come...

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  
  • Home
  • Views On News
  • Oct 20, 2021 - The Affordable Housing Boom Could Boost these 5 Stocks for Years to Come...

The Affordable Housing Boom Could Boost these 5 Stocks for Years to Come...

Oct 20, 2021

Did you know that around 275 m people in India do not have access to adequate housing?

That's about 22% of the population.

Due to rapid urbanisation and lack of affordable housing finance, adequate housing has been an issue that has plagued the country for decades.

However, the situation has improved in the last few years. The Indian government has turned its focus on providing affordable housing.

In 2015, it introduced the Pradhan Mantri Awas Yojana (PMAY-U), an initiative to address the urban housing shortage with a target of building 20 m affordable houses by 2022.

It also provided various tax exemptions and benefits that could boost the outlook for the sector.

These initiatives along with record low-interest rates and discounts from real estate companies are expected to give rise to a boom in affordable housing in the years to come.

--- Advertisement ---
Automobile Sector's Colossal Disruption Could Make You a Fortune

During any major disruption in a sector, fortunes are created.

And now, we are at the cusp of a major disruption that the automotive sector will experience.

It is the electric vehicles gold rush.

At Equitymaster, we have unearthed a hidden way to ride the 15x EV opportunity so that you could take home potentially life-changing gains in the long run.

You can get all details of the hidden way in our upcoming special online event.

YES, Register Me for FREE
------------------------------

Here are five stocks that could benefit from it.

#1 HDFC

Despite growing competition from banks in the home loan segment, HDFC remains firmly in place to benefit from the government's strong focus on affordable housing.

The company is the largest, among housing finance providers in India. It has also earned the reputation of a rock-solid financial institution. Not only in India but the world over.

During the June 2021 quarter, HDFC's individual loan disbursements grew 181% year on year (YoY) on the back of growth in both the affordable housing and premium segment.

The company's management said there was a preference for ready to move in properties compared to under-construction properties.

The demand for home loans remains strong, and disbursements have picked up with the unlocking of respective locations.

FREE Event: Discover Your First Stock for a Potential Rs 7 Crore in Long-term Wealth

While disbursements during April and May of the current financial year were somewhat impacted, the business reverted to normal in the months of June and July. July 2021 disbursements were the highest ever in a non-quarter end month.

HDFC also said it received a loan of US$250 m from International Finance Corporation (IFC), the private sector investment arm of World Bank Group, to expand its green affordable housing portfolio.

The funding will help improve access to finance, while also supporting India's climate goals. As much as 25% of the financing has been earmarked for green affordable housing.

#2 Can Fin Homes

Can Fin Homes is a housing finance company promoted by Canara Bank. The company focuses on providing funding to low and middle group individuals & first-time homebuyers.

As around 90% of the company's overall portfolio constitutes housing loans, the company is in a perfect position to capitalize on the boom in affordable housing.

Due to its strong parentage, Can Fin enjoys strong financial flexibility and has been able to raise funds through diversified sources at competitive rates.

It has also had comfortable asset quality parameters over the years as it gives loans to mostly salaried customers. Salaried professionals form 73.2% of its loan portfolio.

Furthermore, all its loans are backed by adequate security leading to healthy asset quality.

--- Advertisement ---
3 "Super Smallcaps" You Didn't Know About

You may not have heard of these 3 "super smallcaps" ever before...

The mainstream press doesn't cover them... Most brokers don't know about them either...

Stocks like these 3 "super smallcaps" only come to your notice when they have rallied by hundreds or even thousands of percent... and are all over the news!

Richa revealed it all during her Super Smallcaps Summit

If you missed this event for some reason, then you can watch the special replay of this event.

Click Here to Watch the Replay...
------------------------------

The company's average ticket size of loans in the housing loan segment stood at Rs 19.8 lakh in the financial year 2021, with an average Loan to Value (LTV) ratio of about 64%.

In its latest quarterly results, Can Fin Homes saw its loan disbursements jump over 100% YoY to Rs 8.9 bn as against Rs 4 bn in the year-ago period.

New approvals also zoomed over 200% YoY to Rs 8.3 bn from Rs 2.6 bn in the June 2020 quarter.

#3 Godrej Properties

Godrej Properties (GPL) is the real estate development arm of the Godrej Group. The company has a fair share of projects in the affordable housing category.

Due to its ties to the Godrej Group, the company enjoys the lowest funding cost in the sector which bodes well for the business.

The company has been focusing on increasing its market share in focus markets. It has significantly increased its market share in the real estate market of NCR Delhi. It has increased its market share in Bangalore and Pune as well.

For the June 2021 quarter, Godrej Properties' gross sales bookings declined 68% YoY to Rs 5 bn due to the second wave of Covid-19 and an absence of subvention schemes and new launches during the quarter.

However, sales bookings have picked up again from July 2021 onwards and with four to five planned launches in the September quarter.

With Rs 41 bn of cash and liquid investments as of June 2021 post the recent qualified institutional placement (net cash of Rs 0.2 bn), the company is well-positioned to augment its land bank.

#4 State Bank of India

Any talk of affordable housing will be incomplete without mentioning the country's largest and oldest public sector bank, the State Bank of India.

The bank has the strong support of the Government of India (GoI), both on an ongoing basis and in the event of distress, as GoI is its largest shareholder.

As a result, it has a wide reach in rural and semi-urban areas. So much so that that 40% of all PMJDY (Pradhan Mantri Jan Dhan Yojana) accounts are with the bank.

Home loans account for the largest chunk of SBI's asset book (23%). SBI plans to double the size of this portfolio over the next five years, from Rs 5 tn in 2021 to Rs 10 tn by 2026.

To achieve its target, it's strengthening its capabilities to improve volumes and delivery. Recently, the bank announced various festive offers for prospective home loan customers that could further boost buying sentiment.

As affordability improves, the demand for affordable and mid-segment houses is expected to go up.

The bank has also removed the distinction between a salaried and a non-salaried borrower. Now, there is no occupation-linked interest premium being charged to prospective home loan borrowers.

#5 Ashiana Housing

Ashiana Housing (AHL) is a real estate company based in New Delhi. The company has built a strong brand over the last 42 years through its impeccable track record.

While most real estate players focus on metros, AHL has completely avoided them. AHL's focus has always been Tier II and Tier III cities.

The company only enters those cities which are growing industrial hubs. Even in metros, their projects are on the outskirts of the city.

These niche areas have meant less competition and allowed AHL to dominate the market for long periods. This makes it an excellent play on the affordable housing megatrend.

Ashiana has a prudent capital allocation policy which ensures it has a strong balance sheet. It preserves cash during upcycles which helps it ride down cycles.

Due to the strength of the balance sheet, the company's ability to hold inventory through cyclical downturns is enhanced.

AHL currently has a healthy pipeline with 53.3 lakhs sq. ft. land available for future projects and 57.7 lakhs sq. ft. of land available for future development.

What next?

India's property market is on a rebound after being in a down cycle for the last six years as a series of headwinds had hurt demand for new houses and apartments.

The sector has been bullish recently as interest rates have been low and government policies have been supportive.

The Nifty Realty index has risen nearly 130% in the past year, far outpacing the Nifty 50 index, which has gained 55% during the period.

With the second wave subsiding, sales are expected to revive which in turn will benefit both real estate developers and housing finance companies.

In fact, according to Brijesh Bhatia, Research Analyst at Fast Profits Report, housing finance stocks are offering a great short-term trading opportunity right now,

These stocks have broken out on the charts with a strong bullish momentum and have a lot of potential to go higher.

Watch this video to know more:

How the affordable housing boom pans out remains to be seen. Meanwhile, stay tuned for more updates from this space.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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...

Ayesha Shetty

Ayesha Shetty is a financial writer with the StockSelect team at Equitymaster. An engineer by qualification, she uses her analytical skills to decode the latest developments in financial markets. This reflects in her well-researched and insightful articles. When she is not busy separating financial fact from fiction, she can be found reading about new trends in technology and international politics.

Equitymaster requests your view! Post a comment on "The Affordable Housing Boom Could Boost these 5 Stocks for Years to Come...". Click here!

  

More Views on News

5 Indian Companies with Enviable Stock Portfolios (Views On News)

Oct 2, 2021

Here's how you can invest in multiple companies without really investing in multiple companies.

7 Stocks With Highest FII Shareholding (Views On News)

Aug 26, 2021

Come hell or high water, these are top Indian stocks which FIIs never leave.

HDFC Shares Rise as Loan Disbursements Jump 181% (Views On News)

Aug 2, 2021

The company witnessed a growth in both the affordable housing and premium segment as lockdown restrictions eased.

6 Debt Free Penny Stocks with Solid Growth (Views On News)

Oct 2, 2021

Penny stocks which have a decent balance sheet, low or zero debt and a track record for paying consistent dividend fare much better against their peers.

3 Stocks Riding the Fintech Megatrend in India (Views On News)

Sep 29, 2021

India's fintech industry, valued at US$31 bn, is projected to grow to US$84 bn by 2025.

More Views on News

Most Popular

Differences Between Trading and Investing

A simple to guide to understand the difference between investing and trading

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

How to Find Your Next 10-Bagger in this Market (Profit Hunter)

Nov 19, 2021

The #1 make or break factor in your portfolio you shouldn't ignore.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

HDFC SHARE PRICE


Dec 1, 2021 (Close)

TRACK HDFC

HDFC - MANSI FINANCE COMPARISON

COMPARE HDFC WITH

MARKET STATS