Nirmal Bang launches coverage of two housing finance stocks with up to 30% upside potential.
HFFC received a ‘Buy’ recommendation with a target price of Rs 1,150, while Aavas received a ‘Buy’ recommendation with a target price of Rs 1,775.
The company projects an upside potential of 30.5 per cent for HFFC from Friday’s closing price of Rs 881.10, while for Aavas, it expects an upside potential of 14 per cent from the current price of Rs 1,545.
Aavas Financiers, which is scheduled to report quarterly results later this week, reported a 13% gain over the past month. However, a 12% decline was reported over the past year. On the other hand, HFFC rose 4% last month after rising 23% last year.
Even as the Indian housing market suffers from a severe shortage of affordable housing options, the outlook for Affordable Housing Finance Corporation (AHFC) remains positive, according to a report by Nirmal Bang.
With its geographically diverse portfolio, deep distribution focus, niche customer segments and fragmented underwriting model, AHFC is best positioned to capitalize on this opportunity, the brokerage said. “Given increasing urbanization, rising per capita income, government initiatives and low mortgage penetration, we see significant growth opportunities,” the brokerage firm adds. However, the report expresses concerns that the sector faces challenges including increasing competition intensity and short-term house price pressures. It spreads and operating costs increase. Additionally, AHFC experienced de-rating due to oversupply, particularly due to stake sales by private equity funds.
India’s housing shortage and low mortgage penetration highlights the urgent need for affordable housing solutions and presents strong growth opportunities for AHFC. As these companies navigate the challenges and leverage favorable market dynamics, investors can see potential in the promising future of India’s affordable housing finance sector.
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(Disclaimer: Recommendations, suggestions, views and opinions provided by experts are their own and do not represent the views of The Economic Times.)
