India Shelter Finance share price gains 16% in June so far; what’s driving the rally?

  • India Shelter Finance share price gained nearly 4% on Friday, with a low volume stock showing momentum. ICICI Securities highlights the company's digital credit solutions and potential risks of weaker growth and portfolio quality.

Dhanya Nagasundaram
First Published14 Jun 2024, 11:17 AM IST
India Shelter Finance share price opened at an intraday low of  <span class='webrupee'>₹</span>660 apiece on BSE, on Friday's session.
India Shelter Finance share price opened at an intraday low of ₹660 apiece on BSE, on Friday’s session. (iStock)

So far in June, India Shelter Finance Corporation share price has climbed by around 16%. ICICI Securities in its recent report maintained a buy call on India Shelter Finance Corporation, with a target price of 800. The brokerage expects an further upside of 16-23%. 

The brokerage justified its reasoning by citing India Shelter's FY24 annual report, which emphasises the company's goal of sustaining 30-35% YoY growth in the near future through 'purpose, integrity, and technology'.

India Shelter Finance strives to assist underserved clients in tier 2-3 cities (90% of borrowers); integrity - transparency in customer service and business practices; and technology - simple and secure access to the company's goods and services. Deepening presence in current 15 states (94% of the mortgage business) by opening 30-40 branches every year.

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On Friday's session, India Shelter Finance share price opened at an intraday low of 660 apiece on BSE, the stock touched an intraday high of 693 apiece. India Shelter Finance Corporation share price gained nearly 4% on Friday's flat trade. India Shelter Finance share price was listed on the bourses in December 2023, and the stock has since gained 27%. 

According to Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, this is a low volume stock but has gained traction in the June month, up around 16%. The upward momentum could continue in the near term towards 725, and support is seen around 655. One should, however, not be aggressive on this counter as it is a low volume stock.

Brokerage house, ICICI Securities stated that India Shelter has been at the forefront of providing friction-less end-to-end digital credit solutions to its customers since its inception, with salesforce adoption in 2013 and one of the industry's lowest turnaround times of 4 days (onboarding to sanction) reflecting its unwavering focus on developing tech-enabled business processes. 92% digital collections, 99% E-Nach requirements, and 98% e-signing in FY24 demonstrate high tech penetration.

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The brokerage noted two key risks: weaker growth compared to projections of more than 30% in FY25/26, and deterioration in portfolio quality.

On June 10, the Union Cabinet authorised government funding for the construction of three crore dwellings via the Pradhan Mantri Awas Yojana (PMAY).

In a recent interview with CNBC-TV18, Rupinder Singh, MD & CEO of Gurugram-based housing financier India Shelter Finance Corporation, stated that plans such as PMAY foster growth. Such efforts have the potential to improve growth by 10-12% for any affordable housing financing provider, not only India Shelter.

As per CNBC-TV18 news report, Singh stated that the administration has a lot planned for the first hundred days, and he anticipates some favourable developments for the home finance industry in the next Budget in July.

Housing loans account for approximately 60% of India Shelter's loan book, with the remaining 40% dedicated to loans against property. The PMAY policy covers around 10-12% of all home loans, according to CNBC-TV18 news report. 

Also Read: Kotak Institutional raises target price for Adani Ports and SEZ to 1,650, says outperformance can continue for long

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.

 

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First Published:14 Jun 2024, 11:17 AM IST
HomeMarketsStock MarketsIndia Shelter Finance share price gains 16% in June so far; what’s driving the rally?

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