India’s biggest home loan provider HDFC has given real estate stocks yet another reason to rebound



  • Housing Development Finance Corporation individual loan disbursements grew rapidly by 181% year-on-year in the June quarter.
  • The leading housing finance company is seeing strong demand for home loans as many locations unlocked after the covid.
  • Shares of real estate companies have been rising for the past 30 days in hopes of a recovery.

India’s largest private housing finance company said demand has improved in both the affordable segment and high-end properties.

While the company’s net profit edged down to 5,310 crore from ₹ 5,669 crore in the same period last year, the Housing Development Finance Corporation (HDFC) recorded 181% growth in loan disbursements. individuals in the June 2021 quarter.

HDFC surprised the streets with nearly flat asset quality performance in a quarter where most peers in the housing sector as well as other asset finance sectors reported a significant increase in distressed loans “Kotak Institutional Equities said in its August 3 report.

ESB / Thrive

The disbursement of a home loan refers to the release of the loan amount by the bank or financial institution to the borrower. “While disbursements during the months of April and May of the current fiscal year were somewhat affected, activity returned to normalized trends during the months of June and July,” the company said. when announcing its June quarter results.

This is a trend that has continued in recent quarters with exceptions in April and May 2021 when the second wave of the pandemic hit.

Watch the company’s CEO, Keki Mistry, express similar optimism during a conversation with Business Insider in February this year.

This helped real estate stocks support the rally seen over the past month.

The five main real estate actions Earnings on August 2 The last 30 days
DLF 4% 25%
Oberoi Realty 9% 16%
Properties of Godrej 2% 17%
Indiabulls Real Estate 3% 33%
Prestige Real Estate Projects seven% 26%

The Indian real estate industry has been in limbo for a few years now. The pandemic has made matters worse and, despite constant cuts in benchmark interest rates by the Reserve Bank of India (RBI), the recovery has been slow, to put it mildly.

According to the latest data from Anarock real estate consultants, more than 1.74 lakh of houses under construction – estimated at more than 1.4 lakh crore (around $ 20 billion) are stranded in India’s seven major cities. These projects were launched before 2014 but have not been completed since.

The total number of properties under construction in India exceeds 626,000. Even HDFC’s income statement noted that people preferred ready-to-move properties over those under construction.

Many of those who have taken out home loans also find it difficult to repay. Individual non-performing assets (APNs) have increased due to slippages after the impact of the second wave of the pandemic.

India's biggest home loan provider HDFC has given real estate stocks yet another reason to rebound
ESB / Thrive

However, the outlook for real estate stocks has been so poor that investors are hungry for optimism. And, a part has been made available for those looking for it.

Macrotech Developers, the owner of the Lodha property brand – one of the largest developers in India – recorded a total sales reservation of 957 crore in the June quarter, including 654 crore in June.

India's biggest home loan provider HDFC has given real estate stocks yet another reason to rebound
ESB / Thrive

“We expect the sector to outperform in the coming years where companies like DLF, Oberoi Realty, Godrej Properties, Phoenix Mills, Brigade companies, Indiabulls Real Estate and Sobha, which collectively contribute 87% of the Nifty index. Realty, are poised to generate above-average income. Yields in the years to come and should be viewed as long-term investment bets in portfolios, “brokerage firm ICICIdirect said recently.

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