Income group Monthly expenditure on housing Est. no. of household Housing shortage Share of shortage
( Rs ) ( million ) ( million ) ( % )
Economically weak 0 – 3300 17.5 17.20 98.2
Lower income group 3301 -7300 27.5 1.50 5.4
Middle income group 7301 – 14500 9.9 0.04 0.2
Higher income group 14500 7 – –
Source : Report of technical group ( 12th 5 year plan ) on housing shortage
Above table shows the shortage of affortable housing and represents the enormous opportunity present and everybody has space to grow.
But instead of growth by new companies what would be important that which HFC’s is able to maintain its asset quality.
Obtaining market share at the cost of assest quality is not advisable.
As well said by warren Buffet ‘ When the tide turn off then you come to know who is sailing naked ‘
For Gruh finance the LTV ( loan to value ) is 65% – 75% max. which shows the conservative mindset of the management and margin of safety in case of default, while incase of the HFC LTV is generally 85%.
For last 5 years for Gruh FY10-FY14 gross NPA’s has come down from 1.11% to 0.27%.
While for Repco for June FY14 the gross NPA was 2.5%.
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