An analysis of top Housing Finance Companies in India
The central government has come out with schemes such as the credit-linked subsidy schemes (CLSS) under the Pradhan Mantri Awas Yojana (PMAY) that have helped in moving towards the goal of housing for all.
The Indian housing finance market witnessed a decent rise in home loan outstanding of 16% from fiscal 2015 to 2020. It was primarily due to higher disposable income, robust demand, and a more significant number of competitors entering the vertical.
At the end of FY-21, the outstanding loan portfolio of home loans in India stood at a whopping Rs 22.4 lakh crore, growing 12.1% since its size in FY-20. Also, between FY-17 and FY-21, the Indian home loan market grew by 32% CAGR.
Experts believe the market will show strong growth levels, nearing a 22% CAGR between 2021-2026. And one segment that may drive these growth levels is the affordable housing market.
Between FY-20 and FY-21, affordable home loans showed a YoY growth of 8%, reaching Rs 13 lakh crores in portfolio size.
The central government has come out with schemes such as the credit-linked subsidy schemes (CLSS) under the Pradhan Mantri Awas Yojana (PMAY) that have helped in moving towards the goal of housing for all.
Sale of residential units for the three months of January-March was at a four-year high with 78,627 units sold across the top eight Indian cities despite the third wave, according to a Knight Frank India report released on Monday. This was 9% higher on a year-on-year basis.
Anarock and PropTiger had released their data for residential markets last week. Anarock said that housing sales across seven cities increased 71% y-o-y in January-March to 99,550 units across seven cities, while PropTiger reported that sales increased 7% y-o-y to 70,623 units during January-March across eight major cities.
Housing Finance—Growth Drivers
Based on outstanding housing loans in FY2019, HFCs and PSBs accounted for 40% and 39% of the market share, respectively. Home finance businesses' market share has increased in recent years, whereas public sector banks' market share has decreased based on outstanding housing loans.
In FY2019, PSBs had a market share of 37 percent based on housing loan disbursement, while housing finance businesses had a market share of 41 percent. When compared to other lenders, HFCs have the largest market share in terms of volume.
The proportion of urban residents in the total population has risen steadily over time. It has climbed from 17 percent in 1951 to 35 percent in 2021. Housing demand has been driven across the country by changing lifestyles, the rise of individual consciousness, societal views, and more labour mobility.
Demography-wise, we have one of the highest young populations globally, with a median age of 28 years.
In India, nuclearization in urban areas is increasing housing demand and, as a result, house finance. A change from a joint family to a tiny family is referred to as nuclearization.
The Indian housing finance sector may consist of more than 80-plus players. But the industry is dominated by a few select. They are: HDFC, Indiabulls Housing Finance, PNB Housing Finance Limited and LIC Housing Finance. Together, they command a 78% market share.
HDFC
HDFC is a financial services company with its core operation centred around the Indian housing market.
Housing Development Finance Corporation Ltd., incorporated in the year 1977, is a Large Cap company (having a market cap of Rs 485,360.22 Crore) operating in the NBFC sector.
It's India's leading provider of housing finance. The core product portfolio is broadly classified into three categories: housing loans, non-housing loans, and other home loan products.
HDFC's secondary operation is concerned with investments in financial securities. HDFC is a major stakeholder in the HDFC group of companies having a presence across different sectors such as banking, insurance, asset management, etc.
HDFC has total assets of Rs 6,23,420.03 crore, a turnover of Rs 35,681.74 and a net worth of Rs 1,15,400.48 crore as of December 31, 2021.
In FY22, HDFC has approved retail home loans to the tune of Rs 2 trillion. This is the highest ever home loan approval by the mortgage financier in a financial year. This is a 30% increase over the loans worth Rs 1.55 lakh crore sanctioned in FY21.
Financials
HDFC reported a net profit of Rs 3,260.69 crore for the December quarter, up 11.44 per cent against a profit of Rs 2,925.83 crore in the same quarter last year.
Total revenue from operations came in at Rs 11,783.66 crore against Rs 11,707.00 crore in the corresponding quarter last year.
Net interest income (NII) for the quarter stood at Rs 4,284 crore compared with Rs 4,005 crore in the previous year, up 6.96 per cent.
| Profitability | 2021 | 2020 | 2019 | 2018 |
| ROCE(%) | 8.05 | 10.2 | 9.56 | 8.96 |
| ROE (%) | 9.67 | 14.48 | 10.12 | 9.51 |
| ROA(%) | 1.74 | 2.46 | 1.66 | 1.38 |
| EBIT Margin | 33.44 | 46.87 | 45.94 | 43.65 |
| Net Margin | 9.75 | 15.20 | 10.59 | 8.99 |
| Cash Profit Margin | 10.01 | 15.44 | 10.72 | 9.17 |
During the nine months ended December 31, 2021, HDFC’s average size of individual loans stood at Rs 32.3 lakh (previous year: Rs 28.5 lakh). For the quarter, the average loan size was Rs 33 lakh.
The assets under management (AUM) stood at Rs 6,18,917 crore as against Rs 5,52,167 crore in the previous year. Individual loans comprise 79 per cent of the AUM.
The gross non-performing loans (NPLs) as at December 31, 2021, stood at Rs 12,419 crore.
Stock Performance
| Stock Returns | Change(%) |
| 1 week | 12.68% |
| 1 Month | 18.77% |
| 3 Months | -1.5% |
| 1 Year | 7.68% |
| 3 Years | 27.9% |
| 5 Years | 76.74% |
LIC Housing Finance
Incorporated in 1989, LIC Housing Finance Ltd (LICHFL) is one of the largest Housing Finance Companies in India.
It provides long term finance to individuals for the purchase or construction of house/flat for residential purposes in India. LICHFL also provides finance on existing property for business/ personal needs and also gives loans to professionals for the purchase/construction of Clinics/Nursing Homes/ Diagnostic Centers/ Office Space and also for the purchase of equipment.
In FY-2019, It has 9 regional offices, 24 Back-offices, and 282 marketing Offices across India. It also has 2 foreign offices in Kuwait and Dubai to cater to the Non-Resident Indians in the Persian Gulf countries covering the residents of Bahrain, Dubai, Kuwait, Qatar, and Saudi Arabia. It has more than 450 centres across India.
The company also has more than 12000 marketing intermediaries or agents to guide through the loan processes. It also has an online home loan approvals facility on its website.
Financials
LIC Housing Finance reported a 6 percent increase in profit after tax at Rs 767.33 crore for the quarter ended December 2021, aided by higher collections and a drop in provisions.
It had reported a profit after tax of Rs 727.04 crore in the same period of the previous fiscal. Provisions during the quarter stood at Rs 355 crore as against Rs 665 crore made in the second quarter of this fiscal.
Net interest income (NII) grew 14 percent to Rs 1,455 crore, as against Rs 1,281 crore for the same period in the previous year.
| Profitability | 2021 | 2020 | 2019 | 2018 |
| ROCE(%) | 8.14 | 9.11 | 9.40 | 9.37 |
| ROE(%) | 14.11 | 13.90 | 15.89 | 15.77 |
| ROA(%) | 1.22 | 1.15 | 1.31 | 1.25 |
| EBIT Margin | 89.59 | 91.50 | 93.59 | 93.61 |
| Net Margin | 13.78 | 12.18 | 13.99 | 13.50 |
| Cash Profit Margin | 14.05 | 12.44 | 14.06 | 13.59 |
Net interest margin (NIM) improved to 2.42 percent as against 2.36 percent.
The stage 3 exposure at default stood at 5.04 percent, as against 2.68 percent as on December 31, 2020.
The individual loan portfolio was Rs 2,29,321 crore, compared to Rs 2,04,444 crore earlier, a growth of 12 percent. project loan portfolio stood at Rs 14,091 crore as against Rs 15,753 crore as on December 31.
Total outstanding portfolio grew at 11 per cent to Rs 2,43,412 crore from Rs 2,20,197 crore.
Stock Performance
| Stock Returns | Change(%) |
| 1 week | 7.35 |
| 1 Month | 13.04 |
| 3 Months | 1.49 |
| 1 Year | -7.52 |
| 3 Years | -29.64 |
| 5 Years | -38.13% |
AAVAS Financier
Aavas Financiers Ltd., incorporated in the year 2011, is a Mid Cap company (having a market cap of Rs 19,858.87 Crore) operating in the NBFC sector.
Aavas Financiers Ltd. key Products/Revenue Segments include Interest, Income From Financial Services, Fees & Commission Income and Income From Sale Of Share & Securities for the year ending 31-Mar-2021.
The company issued its IPO in October 2018. Shortly after issuing the IPO CDC group, United Kingdom has invested Rs. 200 Crore in Aavas.
In September 2019, the company received Rs 345 crore investment from International Finance Corporation, a member of the World Bank Group.
In March 2020, Aavas signed an agreement with Asian Development Bank for receiving a loan amount of $60 million, especially targeting the 'women in the lower-income group.
In December 2020, to promote the concept of Green Housing, International Finance Corporation signed an agreement with the company.
In March 2022, Aavas was recognized by the Great Place to Work® Institute as among the best companies to work in India.
Financials
The company has reported a total income of Rs. 342.8664 crores during the period ended December 31, 2021, as compared to Rs. 325.45 crores during the period ended September 30, 2021.
| Profitability | 2021 | 2020 | 2019 | 2018 |
| ROCE(%) | 10.07 | 10.23 | 10.98 | 8.41 |
| ROE(%) | 12.93 | 12.72 | 11.79 | 8.04 |
| ROA(%) | 3.48 | 3.75 | 3.64 | 2.30 |
| EBIT Margin | 73.68 | 73.22 | 72.65 | 66.76 |
| Net Margin | 26.13 | 27.57 | 24.75 | 18.82 |
| Cash Profit Margin | 28.05 | 29.76 | 26.16 | 19.99 |
It has posted a net profit of Rs. 88.7603 crores for the period ended December 31, 2021, as against a net profit / (loss) of Rs. 91.9043 crores for the period ended September 30, 2021.
It reported an EPS of Rs. 11.19 for the period ended December 31, 2021, as compared to Rs. 11.60 for the period ended September 30, 2021.
Stock Performance
| Stock Returns | Change(%) |
| 1 Week | 11.17 |
| 1 Month | -3.28 |
| 3 Months | -11.67 |
| 1 Year | 9.48 |
| 3 Years | 126.85 |
Indiabulls Housing Finance
Indiabulls Housing Finance Ltd., incorporated in the year 2005, is a Mid Cap company (having a market cap of Rs 8,067.92 Crore) operating in the NBFC sector.
Indiabulls Housing Finance Ltd. key Products/Revenue Segments include Interest, Income From Financial Services, Fees & Commission Income and Dividend for the year ending 31-Mar-2021.
It is part of Sameer Gehlaut's Indiabulls group and contributes approximately 80% of the group's turnover.
In 2016, Indiabulls Housing Finance announced that it would invest Rs100 crore in innovative technology platforms.
The same year it became the first mortgage company to complete end-to-end digitisation of loan sanctions in India. It also has an application on Facebook, IB Easy which facilitates loan applications through social media.
Indiabulls Housing Finance bought a 40% stake in London based OakNorth Bank for £66 million in 2015, making it the largest shareholder in the bank which was founded by serial entrepreneur Rishi Khosla and specialises in lending to small businesses.
The company also has a branch office in Dubai, United Arab Emirates. It provides loans to Non-Resident Indians based in UAE to buy properties in India.
Financials
Indiabulls reported a 40.4 per cent dip in its consolidated profit after tax to Rs 329 crore in the December 2020 quarter, due to higher provisioning.
Net interest income (NII) grew to Rs 809 crore from Rs 750 crore in the second quarter of the current financial year, helped by a lower cost of funds.
| Profitability | 2021 | 2020 | 2019 | 2018 |
| ROCE(%) | 9.44 | 10.18 | 12.38 | 11.57 |
| ROE(%) | 7.68 | 13.68 | 26.46 | 29.36 |
| ROA(%) | 1.23 | 1.86 | 3.10 | 3.25 |
| EBIT Margin | 84.60 | 83.72 | 89.72 | 85.79 |
| Net Margin | 11.98 | 16.38 | 23.75 | 25.80 |
| Cash Profit Margin | 13.08 | 17.20 | 24.05 | 26.15 |
Gross non-performing assets (NPAs) stood at 1.75 per cent and net NPAs at 0.77 per cent. The company has reached a collection efficiency of 98 per cent.
The capital adequacy ratio stood at 30.5 per cent and tier 1 at 23.7 per cent.
Company loan book was at Rs 70,282 crore as of the December 2020 quarter. Total disbursement in the third quarter of 2020-21 stood at Rs 3,458 crore; of which, retail loan disbursals constituted 75 per cent.
Stock Performance
| Stock Returns | Change(%) |
| 1 Week | 10.12 |
| 1 Month | 21.42 |
| 3 Months | -18.64 |
| 1 Year | -8.84 |
| 3 Years | -80.48 |
| 5 Years | -82.13 |
Note: The above information is provided solely for educational purposes. Investing in financial markets involves risk; therefore, before making investment decisions, please consult your financial advisor.
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