Nirmal Bang initiates coverage on 2 housing finance stocks with upside potential of up to 30%
housing finance companies, domestic brokerage firm Nirmal Bang has initiated coverage on Home First Finance Company (HFFC) and Aavas Financiers.
HFFC gets a ‘buy’ recommendation with a target price of Rs 1,150 while Aavas has a ‘buy’ recommendation with a target price of Rs 1,775.
The firm foresees an upside potential of 30.5% for HFFC from its closing price of Rs 881.10 on Friday, while it expects an upside potential of 14% from its current price of Rs 1,545 for Aavas.
Aavas Financiers, which is also due to report its quarterly results later this week, has reported a 13% gain in the past one month. However, it has reported a 12% decline for the last one year. HFFC, on the other hand, has gained 23% in the last year, while increasing 4% in the last month.
Despite the backdrop of India's housing market grappling with a significant shortage of affordable housing options, the outlook for affordable housing finance companies (AHFC) remains positive, according to a report by Nirmal Bang.
AHFCs with a geographically diversified portfolio, a deep distribution focus, a niche customer segment, and a granular underwriting model are considered best-positioned to capitalize on this opportunity, the brokerage said.
“Factors such as rising urbanization, increasing per capita income, government initiatives and low mortgage penetration, adds the broking firm, a substantial opportunity for growth can be seen,” the report suggests.
However, the report states concerns that the sector faces its share of challenges, including
