Key Highlights of Housing Sector:

About 90% of demand for housing in India is constituted of affordable homes. The recent announcements made by the Prime Minister would certainly boost the confidence of house builders and at the same time provide shelter to many.

RERA (Real Estate Regulatory Act), was one of the initiatives taken by the government for uplifting the Indian housing sector.

‘Housing for all by 2022’ vision is expected to attract investors to build more houses in both rural and semi-urban areas.

Smart city project is about to develop infrastructure in 100 cities.

Atal Mission for Rejuvenation and Urban Transformation (AMRUT) policy introduced by the government to boost the infrastructural growth of the nation by developing 500 cities across the country.

Hence, the Real Estate sector has ample opportunities ahead that has to be utiliZed in order to increase its GDP contribution.

Gruh Finance:

• 59% of shares are held by its parent company HDFC.
• Loan disbursements during the year were 3,856.58 crores
• Mainly Focuses on Retail, Rural sector.
• Signed MOU with NHB to promote the CLSS (Credit Linked Subsidy Scheme)
• GRUH also actively participates in the Affordable housing schemes sponsored by various state government viz. Gujarat, Chhattisgarh and Rajasthan where capital subsidy is offered to beneficiaries of LIG and EWS income segments.

Dividend:

Recommend payment of dividend of 2.30 per equity share of face value of  2 each for the year ended March 31, 2016.

As at March 31, 2016, the loan assets increased to 11,114.55 crores recording a growth of 25%. Individual Home Loans constitute 92% whereas Non-Residential Loans stand at 4% and Developer Loans stand at 4%.

Source of Finance:

NHB Refinance (39%) – Because of this the burden of interest to be paid is reduced as NHB offers lowest interest rate for borrowing

Bank Loans (39%)

Secured Redeemable NCD (8%)

Public Deposits (14%)

Capital Adequacy:

Capital Adequacy Ratio stood at 17.82% as against the minimum requirement of 12%. Tier – I capital was 16.13% against the minimum requirement of 6%. Risk Weighted Assets amounts to 4838 Crores.

Gross NPA’s:

Gross NPA of Gruh finance is among one of the lowest 0.32%.

Employees:

Staff strength as at March 31, 2016 was 641 with a total of 179 branches.

NIM:

Net Interest Margin stood at 421 Crores with NIM percentage of 4.08%.

ROE (%) – Return on Equity have always been above 30%

Loan Assets:

Profit After Tax:

Profit after Tax increasing YoY

Advantages:

• Reciprocal Communication – They speak as well as listen to customers and their needs.
• Flip Side – High levels of response to customer needs.
• They have strong technical and customized tools to evaluate multiple borrowings on same mortgage.
• Their field teams undergo continued education and training to maximize the depth of customer understanding and reach.
• Has an Outlook for a decade ahead.
• They use “Theory of mind” skills rather than maths to gauge their clients and estimate their business growth.

Technical Observation:

50 Day Simple Moving Average and Exponential Moving Average has been acting as a good support. A recent bounce back from 50 Day SMA has taken place

RSI bull shift has taken place and is in the range of 40-80.

Based on the above two conditions, it is a good time to buy Gruh Finance.