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Sundaram Home Finance Ltd. (SHFL) has set its sights on expanding its operations by venturing into the thriving affordable housing segment during the current fiscal year. The company, known for its commitment to financial excellence, is preparing to embark on this new endeavour. According to D. Lakshminarayanan, the Managing Director of SHFL, they plan to initiate a pilot project in Tamil Nadu, similar to their Small Business Loan segment. The company aims to offer loans up to Rs 35 lakh, adhering to the specified criteria for this particular segment. The affordable housing market currently represents around 5-6 percent (approximately Rs 90,000 crores) of the overall housing market and is experiencing a rapid growth rate of approximately 15–16 percent.
Lakshminarayanan believes that venturing into the affordable housing segment is a natural extension for SHFL, given their existing services such as home loans, home improvement loans, home extension loans, top-up loans, and plot loans, which account for 68 percent of their total disbursement in FY23 (amounting to Rs 3,978 crore). Consequently, SHFL anticipates accelerated growth in the affordable housing segment compared to the small business loan segment.
Targeting primarily the salaried class and self-employed individuals in Tier-II and Tier-III cities, SHFL is keen to address the aspirations of aspiring homeowners. Lakshminarayanan commented on the growing desire among young individuals to own a house in smaller towns. While recent interest rate hikes have presented challenges for the affordable housing segment, Lakshminarayanan maintains a positive long-term outlook and foresees significant growth in the coming years.
Having previously ventured into the small business loan segment in October 2022, the housing finance division of Sundaram Finance, based in Chennai, swiftly established ten branches in Tamil Nadu within the first six months. In the current fiscal year, the company plans to open ten additional branches in Tier III and Tier IV cities. With unwavering determination, Lakshminarayanan expresses the company's ambitious targets of achieving a 25–30 percent growth in overall disbursements and a 15 percent growth in assets under management, amounting to Rs 11,005 crore in FY24, primarily by expanding their presence in the dynamic southern market.
In his elaboration, he emphasized that SHFL is observing a broad-based recovery in the housing market, spanning all segments and geographical locations where the company operates. Despite multiple rate hikes, the buying sentiment remains undeterred, with robust demand, which bodes well for the overall housing sector. He further stated that concerns about inflation have been alleviated, resulting in stability in interest rates. From a housing perspective, he highlighted the underlying structural drivers that fuel growth in small towns, providing a solid foundation for the sector's expansion.
SHFL has plans to open approximately 15 new branches in Telangana, Andhra Pradesh, Tamil Nadu, and five other locations during the fiscal year 2024. Additionally, they intend to bolster their workforce by recruiting around 300 professionals for the Small Business Loan (SBL) and prime lending divisions. Regarding gross non-performing assets, they currently stand at 2.5 percent of total advances, and efforts are being made to reduce them further. Collections have remained robust at 95 percent, and there have been minimal instances of slippage. These developments exemplify SHFL's proactive approach to leveraging the market recovery and upholding its commitment to stakeholders.
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