GIC HOUSING FINANCE LTD : (FV RS 10) RS. 220
Background :
GIC Housing Finance
Limited, was incorporated as ‘GIC Grih Vitta Limited’ on 12th December 1989.
The name was changed to its present name on 16th November 1993. The Company was
promoted by General Insurance Corporation of India and its erstwhile
subsidiaries namely, National Insurance Company Limited, The New India Assurance
Company Limited, The Oriental Insurance Company Limited and United India
Insurance Company Limited together with UTI, ICICI, IFCI, HDFC and SBI, all of
them contributing to the initial share capital.
The
primary business of GICHFL is granting housing loans to individuals and to
persons/entities engaged in construction of houses/flats for residential
purposes. GICHFL has presence in 56 branches across the country for business.
It has got a strong marketing team, which is further assisted by Sales Associates
(SAs). It has tie-ups with builders to provide finance to individual borrowers.
It also has tie-ups with corporates for various housing finance needs.
Resource Mobilisation:
The Company takes every
effort to tap the appropriate source of funding to minimize the weighted
average cost of funds. The Company has mobilized resources through the
following sources:
A. Term Loans, B. Refinance from National
Housing Bank (NHB), C. Short term Loan and Commercial Paper, D. Non Convertible
Debentures.
Credit Rating :
The Company had received
below rating from CRISIL and ICRA for its various borrowing programmes
a.
For Commercial Paper/short term loan
programmes as CRISIL A1 plus & ICRA
A1 plus (This rating is the highest credit quality rating assigned by ICRA for
Short Term Debt Instruments.)
b. For Fund Based Long Term Loan Programme as CRISIL double A plus/Stable & ICRA
double A plus. (This rating indicates the high credit quality rating assigned
by ICRA to Long Term Debt Instruments)
c.
For Non-Convertible Debentures Borrowing Programme as
CRISIL double A Plus/Stable & Pronounced as ICRA double A Plus).
Insurance Coverage to Borrowers :
The Company had taken “Special Contingency Insurance”
with The New India Assurance Company Ltd., which covers the borrowers of the
Company as under:
• Personal Accident Insurance: Personal
accident (death only) risk cover, free of cost to the borrowers up to an amount
of outstanding loan at any particular point of time during the term/ tenure of
the housing loan.
• Mortgaged Property Insurance: The
property acquired out of loan, for and up to and extent of the outstanding loan
amount, covered free of cost against fire, earthquake and allied perils
affecting the mortgaged property.
Capital Adequacy Ratio (CAR)
The Company has been maintaining the Capital
Adequacy Ratio (CAR) above the minimum required level prescribed by National Housing
Bank (NHB) from time to time. The CAR prescribed for the present is
12%. The Capital Adequacy Ratio of the Company as at 31st March, 2014 is 17.26%
as against 14.04% as at 31st March, 2013.
Industry Outlook :
Residential
real estate remains the focal point of Indian real estate, regardless of market
conditions. Given India’s rapid population growth, increasing urbanisation and
raising affordability,the Housing Finance Market will continue to grow.
However, considering the fast penetration by banks in Housing Finance Market, Housing
Finance Companies, which are in a position to have access to low cost of funds,
better credit control and customer focus will be in a position to sustain the
growth. With the increase in urbanisation and improving affordability, the
demand for housing loans will continue to grow at a healthy pace.
Year-on-year, the industry saw home loans
grow 20% as of 30th June, 2013, over June last year. Banks recorded 17% growth,
while housing finance companies and non-banking finance companies saw 26%
growth.Presently access to formal credit is mostly available to the people in
the formal sector who are salaried and have dominant incomes. There is a lot of
potential in urban areas also for housing finance to penetrate. India will ride
the wave of urban expansion. The potential rise in urban households will also
be potential customer base for Housing Finance Companies.
Risk Management :
Liquidity risks and interest rate risks arising out of
maturity mismatch of assets and liabilities are managed by the Company by constant
monitoring of the maturity profiles with a periodical review of the position.
Company’s majority of housing loan advances are on variable rate of interest
basis and normally any movement in rate of borrowings is hedged by the loans
advanced at variable rates to a certain extent.
Company operates in the mid segment and large
chunk of borrowers are in the salary group. Company is having CIBIL checks,
field verification, stringent legal and technical due diligence etc. which have
helped to reduce incremental delinquencies. Recovery mechanism is also robust
supported by best use of SARFAESI Act.
The Company’s main thrust continues to be on
Individual Loans. The Retail Loan portfolio as at 31st March, 2014 stood at
5299 crores, During the year 2013-14 , the Company has made provision to the
extent of ` 24.76 crores as against ` 26.93 crores provided for in the year
2012-13. The Company is also carrying an additional provision of ` 58.62 crores
in books, beyond what is prescribed under the guidelines, as a prudential
measure.
Gross Non Performing Assets on retail loans
as on 31st March, 2014 is 1.57% as against 1.86% for the previous year. Net
non performing loans as on 31st March, 2014 is “NIL” as that of the
previous year. The Company is also giving its thrust to improve the average yield
on advances by selling more number of “mortgage loans” (i.e. “Loans against the
property” - LAP); for which the margin is high compared to the loans for
purchase of homes.
Asset Portfolio : Housing Loan As on 31.3.14
:
Individuals : 5046 cr & Non Individuals :
119.8 cr.
Residential Mortgages : (Loans to Individuals
Upto 15 Lakhs) : 3302 Cr & Above 15
Lakhs : 1817 Cr
(Lending fully secured by mortgages on
residential property that is or will be occupied by the borrower or that is
rented)
Valuation :
This Rs 10
FV stock at 215, is available at a P/E of 11.3 times TTM EPS of Rs 19.12
(Industry P/E is 28.5). Book Value is Rs 133, Price to Book Value is 1.64 times
(Industry Price to BV 2.99). ROE is 16.80%, while 3 year ROCE is 12.16%. Company
achieved Compounded Sales Growth of 17.25%, 23.56%, 14.95% & 19.60% in last
12 Months, 3 Yrs, 5 Yrs & 10 Yrs. Compounded Profit Growth of 5.55%,
62.53%, 11.58% & 21.07% in last 12 Months, 3 Yrs, 5 Yrs & 10 Yrs. In
last 5 years total loan disbursement rose from 672 cr in 2009-10 to 1665 cr in
2013-14, while total income rose from 311 cr in to 625 cr and BV soared from 67
to 102 in the same period. Company maintains healthy payout ratio of over 28%.
Investors should buy this Low Profile HIDDEN
GEM NIL NPA Conservative slow and steady
Company’s stock, which is backed by financially strong promoters, as it is
available cheap as compared to its peers such as Repco & Gruh. With thrust
on low cost housing and smart city plan, there will be huge demand for Housing
loan going forward, coupled with falling inflation numbers and expectation of
good monsoon, interest rates will going to reduce going forward, which will
benefit HFCs as it will push demand for small ticket housing loans, which the
company caters and plans to expand its reach. Stock can give 50% return in next
12 months time, with target price of Rs 325.
Hey Thanks for sharing this informative blog, it seems very helpful. i was looking for same kind content about Property Loan
ReplyDelete