- June 11, 2022
- Posted by: Bastion team
- Category: World News
One man’s loss is another man’s gain. This is the investment rationale supporting the LIC Housing Finance Ltd (LICHFL) stock. The mortgages business, which until 2019 was quite crowded, is now left with just a handful of players. The merger of HDFC Limited (the market leader) with HDFC Bank will leave a bigger vacuum for investors.
LICHFL trading at a four-year low valuation of 0.9 times FY23 estimated book could fill the gap to some extent. The asset quality issues being addressed by the management and the renewed focus on retail loans makes a favourable case for investors to hold on to their position in LICHFL stock. Those with some propensity for risk (given the possibility of a delayed improvement in loan growth) can consider accumulating the stock at the current levels.
DHFL vacated the housing finance space in 2019. Same year, Indiabulls Housing, which was then the No. 3 mortgager changed its growth strategy to make it asset-light or go slow on balance sheet growth. A year later PNB Housing, the fifth largest player was hit hard by the pandemic and had to go slow on the business owing to its capital crunch. Meanwhile, the housing finance market polarised into two fragments – the large players who remain competitors to banks and those exclusively in the affordable housing market. While the latter segment is well-represented by stocks such as Aadhar Housing, Home First, Aptus and Repco, the first segment is pretty much left with just two large…