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Shares of housing finance companies are on a roll with most the stocks from the sector trading at their respective lifetime highs on expectations that lower interest rates would help revive demand for home loans.
LIC Housing Finance, Dewan Housing Finance, Indiabulls Housing Finance, Gruh Finance and GIC Housing Finance, hits record high in intra-day trade, trading higher between 1-6% on the BSE. The benchmark S&P BSE Sensex was up 0.04% or 12 points at 28,087 at 1128 hours.
The Reserve Bank of India (RBI) on Thursday, in a surprise move, lowered repo rate by 25 bps to 7.75%.
A cut in interest rate on housing loans would result in lower equated monthly installments or EMIs leading to cost savings for new home buyers.
Among the individual stocks, Indiabulls Housing Finance has surged nearly 8% to Rs 575 on BSE. LIC Housing Finance jumped 5% to Rs 489, followed by GIC Housing Finance (4% to Rs 281), Repco Home Finance (3% at Rs 705), Gruh Finance (2% at Rs 310) and Dewan Housing Finance (2% at Rs 484).
Analyst at IndiaNivesh Securities maintains ‘buy’ rating on LIC Housing Finance with a price target of Rs 551.
“While interest rates are expected to decline which is likely to help LIC housing in saving interest cost, we are keeping our NIMs (net interest margin) assumption at 2.2%. This is mainly because we believe banks are likely to reduce their base rate which will make LIC housing to reduce their lending rates too so as to sustain the current growth rate,” said analyst in a report dated January 16, 2015.
The company has strong pipeline of sanctioning in project loans and expecting around Rs 600-700 crore disbursements in Q4FY15, he adds.
LIC Housing Finance, Dewan Housing Finance, Indiabulls Housing Finance, Gruh Finance and GIC Housing Finance, hits record high in intra-day trade, trading higher between 1-6% on the BSE. The benchmark S&P BSE Sensex was up 0.04% or 12 points at 28,087 at 1128 hours.
The Reserve Bank of India (RBI) on Thursday, in a surprise move, lowered repo rate by 25 bps to 7.75%.
A cut in interest rate on housing loans would result in lower equated monthly installments or EMIs leading to cost savings for new home buyers.
Among the individual stocks, Indiabulls Housing Finance has surged nearly 8% to Rs 575 on BSE. LIC Housing Finance jumped 5% to Rs 489, followed by GIC Housing Finance (4% to Rs 281), Repco Home Finance (3% at Rs 705), Gruh Finance (2% at Rs 310) and Dewan Housing Finance (2% at Rs 484).
Analyst at IndiaNivesh Securities maintains ‘buy’ rating on LIC Housing Finance with a price target of Rs 551.
“While interest rates are expected to decline which is likely to help LIC housing in saving interest cost, we are keeping our NIMs (net interest margin) assumption at 2.2%. This is mainly because we believe banks are likely to reduce their base rate which will make LIC housing to reduce their lending rates too so as to sustain the current growth rate,” said analyst in a report dated January 16, 2015.
The company has strong pipeline of sanctioning in project loans and expecting around Rs 600-700 crore disbursements in Q4FY15, he adds.
