I am not doubting potential of HFC’s. Just being cautious about rosy picture we all build and assume things would continue for 10-20 years at same pace.
Sriram, Sundaram, Chola and Bajaj all have substantial portfolio in housing now. These are not players we can ignore. I remember back in 2006-7, investors on TED were saying HDFC is 25% grower for 10 years. We all know that growth rate did not continue. HDFC is doing 12% growth for past 2-3 years. 10 years is very long period to predict even if macro’s and big picture is favorable right now. We should assume things for 2-3 years and keep checking the story.
Lastly if real estate slowdown continues, many HFC’s and NBFC/Banks will have have LAP portfolio defaults. In that case even if Gruh/Repco are not affected as much, entire sector will be de-rated. When a stock gets 20 PE from earlier 40, it wipes out 2-3 years of investor gain. That’s what I would be worried about in near future.
Disc – Repco is more than 10% of my portfolio.
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