Basant Maheshwari of Basant Top 10 has always been a fan of housing finance companies. His theory is that housing is an essential product for the masses and that they have to resort to finance for the same. He also believes that housing finance is a relatively safer activity because the underlying security (the house) is an appreciating asset and borrowers are wary of defaulting and losing the roof over their head.
Basant’s theory is also that the penetration of mortgage finance in India is low as compared to that of developed countries like the USA. Also, their closest competitors, the Banks, are not interested in small-ticket loans. So, HFCs will have a “free ride”, he says.
Basant’s favourite stocks are Gruh Finance and Repco Home Finance, both of which have given splendid returns to investors. Over the past two years (01.06.2013), Repco has given a return of 171% while Gruh has given a return of 92%.
In his latest interview to CNBC TV18, Basant Maheshwari exclaimed that all NBFCs and in particular housing finance companies are a “blind buy” on the ground that they have a robust business model and visibility of earnings for the next several years. He also advised investors not to be cagey about what they pay for the stock on the basis that their valuations would surge to such an extent in the next five to ten years that the purchase cost will become meaningless.
| Comparison of Housing Finance Companies in India | ||||
| Company Name | Last Price | 52 wk High |
52 wk Low |
Market Cap (Rs. cr) |
| HDFC | 1,190.05 | 1,399.80 | 971.40 | 187,532.92 |
| Indiabulls Hsg | 577.80 | 650.60 | 360.00 | 20,549.96 |
| LIC Housing Fin | 399.85 | 509.40 | 284.60 | 20,178.95 |
| GRUH Finance | 218.05 | 317.00 | 197.00 | 7,925.86 |
| Dewan Housing | 386.85 | 569.70 | 362.00 | 5,640.07 |
| Repco Home | 584.05 | 724.90 | 449.60 | 3,642.36 |
| Can Fin Homes | 653.00 | 839.00 | 309.57 | 1,739.02 |
| GIC Housing Fin | 203.30 | 287.25 | 156.50 | 1,094.79 |
At this stage, we must note that a number of other savvy investors are also gung-ho about housing finance companies.
Rakesh Jhunjhunwala, the Badshah of Dalal Street, holds a treasure trove of Dewan Housing Finance stock. He has also declared that he intends to hold Dewan Housing for the long term because he sees enormous potential in it.
Mohnish Pabrai, the whiz-kid behind Pabrai Funds, is another investor who is bullish about the sector. He made his debut into India by buying GIC Housing Finance Ltd, a PSU.
Some other housing finance companies worthy of consideration are CanFin Housing, IndiaBulls Housing and LIC Housing Finance.
Fact of the matter is that HFCs have produced a zilch in last 6 months. Even the saintly, lofty Gruh has corrected so much from 320 odd 220 odd …DHFL of course is the worst of the lot so far in last 6 months
The other issue with HFCs is the higher provisioning needs is going to take the sheen off the balance sheet, not only in FY16 but big time in FY17 too. On the face of it, this alone will be one single big hurdle. If you want to know more, here is one side of the coin
https://janav.wordpress.com/2015/06/09/repco-home-finance/
Textile stocks like ambika cotton,kitex,kpr mill will be multibaggers of 2015,also pharma
Now its time for Grun & Repco to Nose dive as BM comes in open forum to sell his holdig while the retail investor tempted to buy.
Good Going BM…!
But how long like this.
I will not be surprised. To those who claim to know him. Look at actions on his stocks. His buying and selling. Look closely, is he not one of the most selfish & shrewdest manipulators? That too, by fooling his own subscribers? Integrity? where is integrity at the time of selling old and new stocks?
That is a big risk actually. He has shut down his paid service and his subscribers may now sell and get out. All his stocks are suffering.
In my opinion thins might not turn out as being told by these stalwarts like BM,RJ etc. Presently real estate prices are sky high. In tier II cities prices are still reasonable ( if i may say so !). As economy will improve ( manufacturing and other industries will play major role), banks will prefer lending working capital loans to industries which have higher margins for banks( 12-18%),whereas interest rates for home loans will go down . In that case, banks will certainly out perform HFCs. Present euphoria about HFCs is due to the fact that industry is not showing earnings growth and lending to salaried class ( relatively safer to lend) makes sense to banks and HFCs. If someone is banking revival of economy then Banks are the place to be and not HFCs. Views are invited.
what about margin of safty
Repco is the banker (loan provider) to the unbankable section. Banks like hdfc, axis , icici won’t even touch them*(self employed, unorganized sector) with a long rod. When banks decides to lend aggressively they Dont go in search of small self employed people..it starts lending to infra and real estate biggies.