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Ind-Ra maintains neutral sector outlook for housing finance companies
Jan-08-2025

Credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has maintained a neutral sector outlook for housing finance companies (HFCs), amid increased property prices and inflationary pressures which may impact the sales momentum in 2HFY25. 

According to the report, the industry is likely to witness incremental higher value-led growth compared to volume, as seen from the disbursals data for both large ticket and affordable housing lenders. Lenders have renewed their focus towards affordable housing and loan against property (LAP), as these segments offer superior risk adjusted margin compared to other segments. 

The report noted that the focus of affordable players remains on turnaround time and deeper penetration in the existing geographies, while large ticket players are focused on customer stickiness and cost of funds to remain competitive in relation to banks. 

It said that there is an increasing trend in the share of the LAP portfolio in the pursuit of higher margins, however asset quality monitoring will remain key. Also, there is increased focus on technology upgradation to bring about process efficiency. Hence, there may be a short-term increase in the operating expenses for few players, but it will play out on operating leverage benefit with rising scale.


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