Housing finance cos stand to benefit on rate subsidy
The Hindu Business Line, September 11, 2009, Page 12
Stocks do not see any euphoria post announcement.
Our Bureau, Kolkata
Some of the housing finance stocks reacted positively to the Government decision to allow one percentage point interest subvention on housing loans up to Rs 10 lakh.
According to analysts, the Rs 1,000 crore-interest subsidy scheme announced by the Government on Thursday would help revive demand for housing loans further. Under the scheme, the housing finance companies will be compensated upfront for the loss on interest income on loans disbursed in the next 12 months through the National Housing Board.
Housing finance stocks had seen their year lows in March when housing loan market had contracted. By the end of May, some of the stocks had, however, witnessed their 52-week highs and some others touched the high points in July.
According to industry insiders, liquidity also improved in the intervening period. Some of the housing finance companies, which did not enjoy larger institutional sponsorships, however, faced tight margin situation.
According to Mr Amitbh Chakraborty, President (Equity) of Religare, this move to subsidise interest on the small ticket size loans would help housing finance companies more than the banks. “Entities such as LIC Housing Finance or Dewan Housing have portfolios dominated by small loans. Two key elements – lesser prepayment and very low occurrence of NPAs – in the small loan segment as against big-ticket borrowings, make less than Rs 10 lakh loans profitable”, he added. The Government move would help the housing finance companies to increase their market share.
However, according to analysts, the price movement on Thursday did not reflect any euphoria as many of the stocks in this space were already ruling high.
LIC Housing Finance on Thursday touched its all time high at Rs 688.80. It, however, closed flat at Rs 672.55, marking a 0.25 per cent gain. In the past one month, the stock has gained 70.80 per cent. In the past week, the stock has gained 38.85 per cent.
GIC Housing Finance moved closer to its 52-week high on Thursday, but lost steam and finished at Rs 83.80, up 0.60 per cent.
LICHF, GICHF and Dewan Housing margins are believed to be sustaining owing to decline in wholesale funding cost.
Dewan Housing also moved up today but ended with a loss of 2.5 per cent at Rs 130.80. Other counters such as Gruh Finance and Can Fin Home moved to flat to negative zone.
The Hindu Business Line, September 11, 2009, Page 12
Stocks do not see any euphoria post announcement.
Our Bureau, Kolkata
Some of the housing finance stocks reacted positively to the Government decision to allow one percentage point interest subvention on housing loans up to Rs 10 lakh.
According to analysts, the Rs 1,000 crore-interest subsidy scheme announced by the Government on Thursday would help revive demand for housing loans further. Under the scheme, the housing finance companies will be compensated upfront for the loss on interest income on loans disbursed in the next 12 months through the National Housing Board.
Housing finance stocks had seen their year lows in March when housing loan market had contracted. By the end of May, some of the stocks had, however, witnessed their 52-week highs and some others touched the high points in July.
According to industry insiders, liquidity also improved in the intervening period. Some of the housing finance companies, which did not enjoy larger institutional sponsorships, however, faced tight margin situation.
According to Mr Amitbh Chakraborty, President (Equity) of Religare, this move to subsidise interest on the small ticket size loans would help housing finance companies more than the banks. “Entities such as LIC Housing Finance or Dewan Housing have portfolios dominated by small loans. Two key elements – lesser prepayment and very low occurrence of NPAs – in the small loan segment as against big-ticket borrowings, make less than Rs 10 lakh loans profitable”, he added. The Government move would help the housing finance companies to increase their market share.
However, according to analysts, the price movement on Thursday did not reflect any euphoria as many of the stocks in this space were already ruling high.
LIC Housing Finance on Thursday touched its all time high at Rs 688.80. It, however, closed flat at Rs 672.55, marking a 0.25 per cent gain. In the past one month, the stock has gained 70.80 per cent. In the past week, the stock has gained 38.85 per cent.
GIC Housing Finance moved closer to its 52-week high on Thursday, but lost steam and finished at Rs 83.80, up 0.60 per cent.
LICHF, GICHF and Dewan Housing margins are believed to be sustaining owing to decline in wholesale funding cost.
Dewan Housing also moved up today but ended with a loss of 2.5 per cent at Rs 130.80. Other counters such as Gruh Finance and Can Fin Home moved to flat to negative zone.
Posts
No comments:
Post a Comment