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Centrum Broking
GIC Housing (Buy)
CMP: ₹212.55
Target: ₹340
In our recent update on GIC Housing Finance we highlighted growth acceleration with significant improvement in disbursement. Accordingly, Q4FY15 loan/disbursements grew 24.2 per cent/ 39 per cent respectively. Focus on niche low-middle income segment, primarily in metro/tier-I cities continues to remain its core DNA.
Though gradually, GICHF has shifted its borrowing profile towards non-bank avenues. It recently raised money under National Housing Bank’s refinancing window (priced at 8.9 per cent). We believe the shift in borrowing mix towards non-bank avenues will help offset the impact of any reduction in lending rates (given competitive interest rate scenario) and aid improvement in spreads.
Q4FY15 results were on the higher side to our estimates and reinforce our belief on the positive outcome of the thrust on growth reflected in three quarters of 20 per cent+ y-o-y growth in loan portfolio. We expect the momentum to continue and renewed focus on liability management and limited asset quality risk will aid GICHF scale up to the next leg of growth. Key risk: Lower than expected loan growth.
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