Realty prices will correct due to demonetisation: Can Fin Homes

In an interview to CNBC-TV18, SK Hota, MD of Can Fin Homes spoke about the results and his outlook for the company.

"Along with Seventh Pay Commission, good monsoon and everything else as positive, demonetisation will have a positive impact as far as the real home buyers are concerned," he said.Below is the verbatim transcript of SK Hota's interview to Sonia Shenoy and Anuj Singhal on CNBC-TV18.Anuj: The demonetisation impact -- because the stock market is telling us a lot about what is happening with some of the smaller home finance companies or the mid-tier home finance companies. What is happening, what is the ground feedback over the last one week or so?A: For demonetisation, there is a lot of discussion happening in the media. As far as the ground realities are concerned for the genuine home buyers, this is the best thing that could have happened because somewhere the property prices are expected to discover the real values now. Some correction is expected. If at all, there is some 10-15-20 percent correction in the prices of homes then for genuine home buyers this is the right time because the houses will be much more affordable for them and along with that this year the Seventh Pay Commission is there, good monsoon is there, everything else is very positive. With that, demonetisation will have a positive impact as far as the real home buyers are concerned.When we talk about housing for all by 2022, we don’t talk about the people who buy with black money in the upper segment. We talk about the people, genuine home buyers, who buy a small house. So there maybe some impact initially because of the confusion around it but I suppose in the medium-term and long-term it will be very positive impact as far as home buying is concerned and particularly the primary home buyers, that is first time home buyers.Sonia: That is why in a medium-term to longer-term the impact could be positive but in the very near-term, almost the entire sector runs on cash which is real estate sector. We are seeing prices fall, 15-20 percent across the country. Do you see any slowdown in your own loan book, any kind of higher amount of defaults can we expect in the very near-term?A: Can Fin is a 30-year old company. It is a value-based company where we have given our quarterly earnings presentation, close to 80 percent of my portfolio is to salaried class and almost all into the middle income group. Almost 88 percent is for individual housing. The remaining, little less than 12 percent which is into non-housing, of that less than 50 percent is into loan against property (LAP). It means of the total portfolio, 6 percent is LAP. Of that LAP also, 50 percent is to salaried class.