Rajan effect: Housing finance companies' shares gallop

R Yegya Narayanan Coimbatore | Updated on January 24, 2018

The RBI Governor Raghuram Rajan's decision to cut the repo rate signalling a softer interest rate regime going forward has injected fresh life into not only interest rate-sensitive sectors like auto and realty but also into providers of finance to these sectors — banks and housing finance companies — as well.

Reflecting the interest of the investors in the housing finance segment, shares of some of these companies touched a new 52-week high today.

In fact, one HFC — CanFin Homes — has galloped past its parent Canara Bank by a mile and its valuation today is higher by at least 40 per cent compared to its parent Canara Bank.

Shares of HDFC, Dewan Housing Finance and Indiabulls Housing Finance hit new yearly highs today on the expectation that softer interest rates would revive investment in the housing sector.

HDFC shares witnessed a sharp jump with the stock gaining Rs 64.50 to trade at Rs 1,184.80. The stock touched a new yearly high of Rs 1,185 today. Dewan Housing rallied by Rs 23.50 to Rs 471.45 and this stock too reached a new yearly high of Rs 479.60.

Indiabulls Housing Finance spiralled by Rs 29.10 to Rs 528.55 and this stock too touched a new yearly high of Rs 532.70 before easing a bit.

Others in the HFC segment to race ahead today were LIC Housing which is trading at Rs 468.30, a gain of Rs 14.25, Repco Home Finance which jumped by Rs 4.95 to Rs 684.30 and GIC Housing Finance which gained Rs 7.75 to Rs 271.10.

CanFin Homes, already enjoying a much higher valuation that its main sponsor Canara bank, rallied by Rs 5.20 to Rs 624.05. The stock is valued at least 40 per cent higher than its parent Canara Bank trading at Rs 460.65. CanFin Homes shares have has gone up by nearly 400 per cent this year - from a 52 week low of Rs 160 it touched on January 31, 2014 to its current levels.

Published on January 15, 2015

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