Buy GIC Housing Fin; target of Rs 160: A C Choksi

A C Choksi is bullish on GIC Housing Finance and has recommended buy rating on the stock with a target of Rs 160 in its October 26, 2012 research report.

“GIC Housing Finance Ltd is a subsidiary of General Insurance Corporation of India. The company is engaged in the housing finance activity. They operate in the retail loan segment. They provide loans to individuals and to persons/ entities engaged in construction of houses/ flats for residential purposes.”

“GIC Housing Finance Sales rose 30.32% to Rs 136.5 crore in Q2 FY13 as against Rs 105.4crore during same period a year ago. Net profit rose 148.92% to Rs 23.15 crore in the quarter ended September 2012 as against Rs 9.30 crore during the previous quarter ended September 2011 on the back of declining provisions and write offs. Company has reported nearly 35 per cent growth in sanctions and disbursals duringQ2Fy13. Government reform to allow external commercial borrowing for National Housing Bank (NHB) and housing finance companies will benefit the company. Under this reform, cost of raising funds will be lower as compared to domestic borrowings for the company. This will allowthe company to sanction loan at lower rate to lowincome groups which lead to increase in demand.”

“There was good growth seen in demand in Mumbai, Hyderabad, Chennai and Bangalore. Demand is also picking up in NCR region. Moreover expectation of further offers and discount in rates in festive seasons will lead to pick up in demand. Management is expecting the uptick in demand to continue which will help to see the growth of 25% in coming quarters. Thus, due to positive outlook on company performance and sector we recommend BUY on the stock for medium term with target of Rs 160,” says A C Choksi research report.  

Institutional holding more than 40% in Indian cos

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