'After exiting Gruh Finance, HDFC could now get into low-cost housing segment'

HDFC-owned Gruh Finance is now a part of the Bandhan family after the Gruh Finance board approved its merger with Bandhan Bank.

Kunal Shah, associate director at Edelweiss Financial Services, analysed the deal.

"With respect to promoter shareholding, Bandhan was looking at an inorganic opportunity," Shah told CNBC-TV18 on January 8.

"Given Bandhan’s entire product portfolio, they were looking at a secured space and Gruh is a much better asset in this particular space and that helps Bandhan," said Shah.

Also read: Bandhan Bank acquires Gruh Finance – East meets west but focus to stay on bottom of pyramid

"Strategically, the overall portfolio mix between the secured and unsecured, so post this unsecured would come down to 58 percent from 86 percent plus they will get presence outside of east. Today eastern and north eastern region is where Bandhan is significantly present but this will give a reach out of eastern belt and they could penetrate on the western side. So for Bandhan this should strategically, from longer-term perspective, help," he added.

Talking about the HDFC, Shah said, “They have been able to sell out Gruh at great valuation and as highlighted by the management yesterday, maybe they would look at getting into low-cost housing segment more aggressively.”

“The overall environment the way it is emerging when there is too much of a tight liquidity and other players are slowing down, so that is advantageous to HDFC,” he said.

Source: CNBC-TV18