GIC Housing Finance Ltd

GIC Housing finance
CMP 211.10 MARKET CAP: 1155.37
Gic housing finance is subsidiary of General Insurance Corporation of India which is engaged in housing finance activity providing loans to retail segment for construction of houses/ flats for residential purpose.
Gic Housing’s primary sources of customer are:

  1. Sales associations with a strong marketing team.
  2. They tie-ups with real-estate builders
  3. They also have tie-ups with corporates for various housing needs.
    Risk management:
  4. The company is having CIBIL checks, Field verification, stringent legal and technical due diligence.
  5. The recovery mechanism is supported by SARFAESI Act.
  6. The company also provides Insurance on houses.
  7. The corporates provides guarantees too if sold through them.
    Gic housing’s primary sources of FUNDS:
     The company has Term loans contributing to 4174 cr. which is 72%
     The company also has refinance from NHB, short term loans and Commercial papers.

Insurance Coverage to borrowers:
 Personal accident Insurance:
o Only death cover of the borrower, free of cost to the borrower up to an amount of outstanding loan at any particular point of time during the term/ tenure of the housing loan.
 Mortgage against property:
o The property acquired out of loan, for and up to and extent of the outstanding loan amount, covered free of cost against fire, earthquake and allied perils affecting the mortgage property.
 The company provide this insurance on the request of the borrower which means it is optional.
a. Company:
a. Lower competition from banks and other HFCs.
i. The company has various tie ups with Real estate builders and corporates.
ii. They have their marketing team with their Sales agents and they are increasing branch YOY.
b. The company provide insurance which provides safety to the company.
c. The company provides loan to salaried middle and lower middle class people:
i. Individual housing loan Less than 15 Lacs – 358,190 Lacs
ii. Individual housing loan above 15 Lacs – 281,745 lacs
d. The company is also improving the average yield on advances by selling more number of mortgage loans so their margins will be higher.

b. Industry:

According to Ministry of Housing & Poverty Alleviation, there is huge housing shortage which is 18.78 million in urban areas where GIC is situated.
Govt focus in this sector PMAY (Pradhan Mantri Awas Yojna)
Interest rate cycle is low.
India’s housing to GDP ratio is 7% which is lowest among the world so houses are bought from savings.

A. Company:
i. Availability of longer term funds at affordable rates is a concern which will affect the margins of the company.
ii. The Company’s Debt to Equity ratio is 9.30 times so the company is likely to go for right issue or QIP which could dilute the equity.

B. Industry
a. Government intervention
i. Higher provision for the asset would lead to lower profitability
ii. Any laws which would affect the industry.

Share-Holding Pattern:

Promoters 42.25%
Corporate 7.82%
Public 34.2%
FII 3.82%
DII 10.51%
Others 1.40%
Market cap Free float 657.16 cr.
P/E 10
Major share-holders: (excluding Promoter group)

  1. Reliance mutual fund (various)
  2. Escorts mutual fund (various)
  3. L & T mutual fund


  1. The loan book of the company grew at 24% in previous year compared to 17%

  2. NIM: 2.5%

  3. Capital Adequacy Ratio: 15.36% against 12% prescribed by NHB.

  4. P/E 10.03 P/B 1.52 times

  5. Book value 122.63

  6. Dividend yield 2.33%

  7. ROA 1.70%

  8. ROCE 11.31%

     		IN CRORES

    Mar-15 Mar-14 Mar-13 9m fy16
    SALES 730.91 623.56 552.20 641.34
    SALES% 17.22% 12.92% 26.60% -
    NET PROFIT 102.96 97.55 85.03 88.64
    NETPROFIT MARGIN 14.09% 15.64% 15.40% 13.82%
    NET PROGIT GROWTH 5.55% 14.72% 48.10% -
    EPS 19.12 18.12 15.79 16.46

Disc- Not Holding
Views Invited



Finally bought it around 235-240 reason:

GIC is mostly Mumbai and some extent Pune concentric HFC. You are taking extreme concentration risk if you invest. Invest with this risk in mind.
-Also it is not clear what is their competitive edge Vis a Vis other HFCs and private banks?
-What is cost of funds to GIC? This is very critical parameter for any lending company and needs to be tracked. How is cost of funds trending over the years? Going down or at same level? Do they have AAA rating for their NCDs? If not then their cost of funds cannot match others like India Bull, Dewan, HDFC, LIC, Repco, Gruh etc. That will be disadvantage then.

-What are GNPA and NNPA numbers? Aren’t they all important parameters for any lenders?
-What is their ROE? How is it trending? Coming year projection? Going Up or down?

  • Do they have plans to expand in other geographies? If yes then how will it impact their profitability? If not then what is impact on business sustainability?
  • Many HFCs offer loan against property (LAP), developer loans, retail loans etc. You have not listed all the products offered by GIC. What is their distribution in overall sales pie? Each of these products have different implications?
  • Similarly their various funding sources- source wise distribution in the overall funding pie. Very important parameter to track for HFCs. Some sources like NCDs are cheap (depends on credit rating) vis a vis bank term loans and their increase lowers the cost of funds and improves the profitability. Similarly credit rating change is important development with material impact on business for any HFC.

->They are diversifying their portfolio. During last year they have 56 offices in various cities including Mumbai. ( Annual Report)
->Their 3 Year avg NIM is 2.60%
->Compared to Gruh and Repco (both NIM is above 4) , the NIM is quite less but would start increasing. As they are diversifying with LAP.
-> Their ratings are AA+ and A1 ( Source: Screener)
-> Return Ratios:

Will update more on it Thanks for helping.

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LAP is hotly contested area today. Many private sector banks are competing with NBFCs for this once lucrative segment of market. Hence the yields are now under pressure and will fall further over the period. Today prime mortgage and LAP are lower yield and hotly contested segments. The ones with higher yield are developer loans and LMI (low and medium income) retail segments. The developers loans are lumpy and risky in nature. While LMI is lucrative because of higher yield due to good pricing power. The LMI people cannot switch their loans like IT guys in prime mortgage space. But this needs different kind of skills and processes to accurately assess credit worthiness of borrowers who are often self employed and you also need skills in collections.
Looking at GIC data you will need to justify the purchase. What is an investment thesis here? Is it very high quality, MOAT business available at good price. Or is it buy call just based on very compelling valuation.
Note that everything is a buy at one price and sell at another…Even crap in the crap market has value. So you cannot say this is absolutely no buy opportunity.


disclosure: the stock story was for educational purpose and gaining knowledge from you all.

My bet was on possible cup and handle break out ( a good breakout and liked by Hitesh sir as well as Nooresh sir) with 1.58 time p/b and industry at focus and growing for upcoming 3 to 5 years.

As Ayush sir says check the fanatics of industry leader and then compare it with growing or a possible grower.

My view points:

  1. Gic also has a procedure for credit approvals alike of Gruh
  2. The company is providing loans in the low and middle class. A possible Same as Gruh
  3. It is saying like the person who is in middle class and lower class doesn’t get default as they only have 1 home so they do pay their loan although there may be a default for one instalment but they do pay their loans and their recoverability is easy not like kingfisher :smiley:
  4. The numbers are also increasing qoq and yoy basis.

I am not saying that Gic would be a next Gruh or Repco but can grow as there is a huge opportunity in this segment.

Help me if I am doing anything wrong, as I am a novice.

Thank you



Some correction:
Qtrly figures:
Sales up 17.34% YOY
04.81% QOQ
EPS up 34.54% YOY
17.25% QOQ

Annual Figures ;
Sales up 19.6%
EPS up 20.92%


Result Q3:
Sales 13.6% YOY 2.38% QOQ
EPS: 12.5% YOY 0.15% QOQ

Seems OK

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Any updates on Gic? Everyone looks bullish about it. Should it bought at these levels?

Why is GIC Housing Finance growth rate so less even though it is quite tiny.

Nice Article…–modest-but-steady-growth.html

1)New MD Mr Gopa kumar has joined in Nov 16 who is targeting doubling of book by fy 19 from fy 16 level of 8000 Cr.

  1. Earlier MD Warendra Sinha seemed also an effective person. as Such co is now in expansion & growth mode

  2. V cheap valn (less then PBV of 2 fy 18) n good div yld with good CAGR expected of taleast 25-35% till fy 19.

  3. Opp size inceasing due to new PMAY scheme focussing on Affordable housing where GICHF is a specialist player

  4. V good quality of BS with conservative accounting & zero net NPA

  5. Co did nothing for almost 15-20 years & now since 2013 no of offices has doubled from 33 to 66.

  6. Reliance cap hold 7% Pabrai Investment,LIC,Sundaram MF are the other major SH.

Is the co on the verge of becoming another Canfin with advent of new MDs?

Discl- Taken a tracking position


Edelweiss on GIC Housing Finance:

GIC housing Finance Limited - Changing gear to drive growth

Key Points:

Loan growth target increased significantly due to bigger opportunity and capitalisation of parents GIC’s financial advisors

Reduction in high cost of borrowing and increasing share of high-yield loans expected to boost NIM

Asset quality to improve by new policy of active pursuance of recovery

Healthy earnings will improve RoAA and RoAE

Projected 24% NII growth, 27% PAT growth and 25% loan book growth over FY16-FY19E.

Full Report :


According to the free press journal article loan book should grow from Rs93bn to Rs160bn in 2 years which is a 32% CAGR. This would be a meaningful step up in growth trajectory. Hopefully the management can walk the talk

Disclosure: Invested

GIC Housing 4QFY17 PAT growth of 29% YoY v/s 9MFY17 PAT growth of 14% YoY. So looks like a clear case of growth step up. I guess loan book has grown 17% YoY, though not sure.

GIC Housing Finance has reported results for the fourth quarter and year ended March 31, 2017. The company has reported a rise of 29.94% in its net profit at Rs 46.61 crore for the quarter ended March 31, 2017 as compared to Rs 35.87 crore for the same quarter in the previous year. For the year ended March 31, 2017, the company has reported a rise of 18.66% in its net profit at Rs 147.73 crore as compared to Rs 124.50 crore for the same period in the previous year.

Does anyone have data on NIM, NPA etc?

Disclosure: Invested

npa data was not present in the results. So not sure. By looking at the provisions made. It has increased so gnpa may have increased. Not sure though

Net interest margins for the quarter stood at 2.86 percent as against 2.67 for the same quarter earlier fiscal.
The gross non-performing assets (NPAs) for FY17 stood at 2.33 percent.

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Growth for GIC Housing Finance remained strong in Q4 as reduction in employee expenses lead to higher earnings growth.

S Gopakumar, MD & CEO, GIC Housing Finance is optimistic of geographical expansions and aim to add more branches in FY18. He said their plan to increase networks continue, adding that last year in FY17 they added 5 branches. This fiscal they intend to add 5-8 branches.

He is also very confident of seeing growth in assets under management (AUM) on back of government’s focus on affordable housing.

For FY17 the AUM growth was at Rs 9269 crore compared the earlier fiscal of Rs 7906 crore.

Throwing more light on the fourth quarter numbers, he said the net interest margins for the quarter stood at 2.86 percent as against 2.67 for the same quarter earlier fiscal and the spread was 1.39 percent versus 1.34 percent in the previous year. However, going forward the margins may come down a bit because of reduction in lending rates.

Gopakumar said even if margins may fall a bit, both the profit after tax (PAT) and profit before tax (PBT) will be much higher in FY18 than FY17.

He said the company witnessed some stress on the loan against property (LAP) portfolio, so they chose to grow less in that segment compared to housing loans.

The gross non-performing assets (NPAs) for FY17 stood at 2.33 percent, he said, adding that they aim to bring it down further going forward.

GIC Housing Finance has reported a 24.4 percent increase in net profit at Rs 46.61 crore for the fourth quarter ended March 31. The company had reported a net profit of Rs 35.87 crore for the same period of 2015-16.

The company’s main business is to provide loans for purchase or construction of the residential units.

At trailing 3.8x P/BV. Cheap compared to Gruh, Can Fin and PNB HF.

FY17 Performance Details Below

Disclosure: Invested

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GIC Housing Finance posted its quarterly results today. NII for the quarter increased by 46% yoy to Rs.106 crore in Q1FY18 vs Rs.72.2 crore in Q1FY17. This was on the back of robust rise in net operational revenue by 17% yoy to Rs.275 crore as against slower rise in finance cost by 4% yoy only.

Provisions made on standard and non-performing assets rose more than two times to Rs.25.5 crore in Q1FY18 vs Rs. 6 crore in previous year corresponding quarter.

Lastly, net profit for the quarter increased by 25.4% yoy to Rs.40.2 crore vs Rs.32.2 crore in Q1FY17.

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