Good news for HFC’s. There might be something from budget tomorrow
Affordable housing to be given infra status, says FM.
How this’ll help housing finance companies?
Will this move be benefit only affordable housing players or some ancillary will also be benefits from the move?
As I understand, this directly helps the builders as they will be in a position to borrow at lower cost. In a recent interview, the MD of Gruh finance has mentioned that while the recent interest subvention schemes and etc will help the home buyers get loan at a lower cost (subsidy), there was not enough supply of such affordable homes (there are some criteria for getting categorised as affordable homes such as total cost, area etc) as the builders were not getting enough incentives to build such homes at the first place for buyers to buy. He quoted some numbers about how less number of such loans were taken. Now this infrastructure status tries to address the supply problem, which if resolved should indirectly help the home finance companies as they will be able to give more loans.
Does affordable housing covers only builders, not HFCs ? Here HDFC executive says they can borrow loans from insurance companies. Any idea ?
Also, NHB will refinance Rupees 20,000 crore worth of individual loans. This should help canfin.
I am plain curious about how such meetings should be seen. Specially for a small company charting a high growth path consistently. Canfin homes has been meeting institutional investors very frequently. Is this a regular practice?
Can Fin Homes Ltd has informed BSE regarding “Intimation of Schedule of Institutional Investors Meet”.
They are finding buyers for the 13.5% stake sale by Canara Bank. Otherwise these will be dumped on the market causing stock price to drop given the liquidity in the market. Given how the stock is holding up, they are doing a good job. As long as they don’t disclose any material non-public information to these investors, there is nothing wrong in holding road shows.
Raman, I have been wondering the same as well. One possible reason is that there is lot of focus on affordable housing and Canfin Homes is a good bet in this segment now and is still able to grow around or over 30%. Gruh finance is also in the same segment but the price is already quite high and it will move up slow and steady like any other HDFC group stocks. Other HFC in this segment is Repco but they are having their own problems with NPA. The quarter results declared yesterday showed good growth in bottom line. But their NPA levels have increased heavily due to the demonetization effect. They have used the provisions given by RBI for delayed recognition of NPA but they have still disclosed the NPA levels if they had not used it. So looking at all this - Canfin seems to be attracting lot of interest for investment. It is also part of the MOST 35 fund by Motilaloswal.
Another reason could be the stake sale by the promoters. Just today, Canfin has announced that Canara bank has officially informed RBI about the stake sale and plans to complete the sale by Mar 31st, 2017.Please see link below.
I really hope Canfin gets inspired and able institutional investor who can help lead Canfin into next leg of high quality growth.
The base price for the stake sale is set at Rs. 2000, according to the MD & CEO of Canara bank - http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/F03C666D_C001_494A_A70B_1235193B2590_161150.pdf
Sorry for the elementary question. What does base price mean here? Is this the minimum price, the stakes can be bid against? The stake selling is subject to companies but is it usual to have bids higher than the base price?
I too am not familiar with the bidding process. Perhaps any other boarder in here who knows about it can update us?
Yes Rs.2000 would be the minimum bid price which Canara Bank would expect. It is just like an auction so the bids can be higher than the base price.
Given the current environment I won’t be surprised to see bids coming at 10% higher (or more) than the base price. Why would somebody bid higher? That is because an institutional investor or an Ultra HNI wouldn’t be able to get his desired quantity from the market due to illiquidity. We saw what happened to the price when Catamaran sold there stake earlier.
I won’t be surprised to see other existing major holders also pare their stake at a premium to CMP due to this stake sale by Canara Bank. There is interest in Canfin so interested parties may also approach other existing major holders.
This is a classic case of how illiquidity can help early entrants. Management has done really well not to issue a bonus or stock split despite demands being made in concalls.
I would prefer them not giving any bonus or stock split in future too till the business is doing well.
Discl: Invested and >20% of PF.
Thanks for the details. Any guesses / info on the potential bidders?
Thanks for the information. I have noticed a slew of investor meets by Canfin Homes for last many months now. Looks like a lot of hard work has been done. HFCs are current favorites of the investors and the stake sale should do well. I hope the stake sale brings in some able and talented leadership.
Disc: Invested and holding.
Hi hrfacebuk, can you explain a bit more about illiquidity and share sale by catamaran? They really dumped their holdings which was quite high but if am not wrong, it was mostly bought by Canara Robeco MF (also a promoter now) and not by anyone else. Robeco bought it to bring stability to the price perhaps for supporting stake sale. But then it was during the initial days of demonetization so it was probably a fire sale by catamaran expecting worse market conditions. Guess the would be feeling a little bad now.
Catamaran held almost 4%, robeco which has just entered has 0.64%. This there was absorption of the surprise sale from all corners. The down circuit happened due to market conditions and “shock sale”. Disclosure invested since 2013/14. And did buy into the stock at 1254 (down circuit day)!
Hi Aman, Catamaran held 1.29% at the end if Sep quarter as they had been
selling before demonetization as well. So 1.29% at the end of Sep quarter
and sold them off fully during Dec quarter. I presume they have been
selling some in october as well as the bulk deal info shows that Catamaran
sold 1.5 lakh shares on Nov 15 when price dropped so low (price didnt fall
that much on Nov 9,10 and 11). That 1.5 lakh and little more is what Canara
Robeco had bought.
My bad on this one. I checked tyeir holding for June 2016, and assumed that was the number. Thanks anyways. I am still super bullish on the story, and believe the best for can find is still ahead.
Yes, I am very positive about canfin as well. Just hope a good company guys the stake (HDFC / Kotak / Bajaj Finance / Indusind) etc