Housing Finance Companies (HFCs) including PNB Housing Finance, Can Fin Homes, LIC Housing Finance, and Aavas Financiers have witnessed stock price increases between 4-8%, contrasting the downward trend of the BSE Sensex that was down by 0.04%. The robust demand for Bajaj Housing's initial public offering (IPO) saw an overwhelming response from various investor segments, surpassing the shares on offer by 67 times, with institutional investors subscribing by a massive 222 times.
Additionally, the urbanization drive and government initiatives such as the Pradhan Mantri Awas Yojana (PMAY) are aimed at increasing accessibility to Affordable Housing Finance Companies (AHFCs) for middle and lower-income segments. Analysts have a positive long-term outlook for AHFCs, citing factors such as a large underserved market, favorable demographics, housing shortage, and government incentives like tax benefits and subsidies. The government's commitment to inclusive growth is reflected in its expansion of the PMAY scheme, which aims to provide 3 crore additional houses in both urban and rural areas, aligning with the vision of "Housing for all".
CRISIL Market Intelligence & Analytics (MI&A) estimates project an increase in net interest margins for HFCs from 3.2% in fiscal 2024 to 3.3% in fiscal 2025, attributing this growth to the expected decline in repo rates in the first quarter of fiscal 2025. The non-performing assets (GNPA) for HFCs are anticipated to decrease slightly to 1.3% in fiscal 2025, and credit costs are predicted to reduce by 20 basis points in fiscal 2025, leading to an improved return on assets at 2.0% by fiscal 2025, driven by higher write-offs in the first half of fiscal 2024.