Aadhar Housing Finance is hopeful of the affordable housing market getting back to normal levels by January 2021 as demand is reviving for small-ticket loans, the company's top executive said. The firm, which caters to the home financing needs of the low-income segment, did very well during the last fiscal except for March-end due to the coronavirus lockdown, its Managing Director and CEO Deo Shankar Tripathi said.
"We had a profit growth of 17 per cent after providing hugely for COVID... and provisions for builder loan. Precisely Rs 90 crore provision was made after the profit. The idea behind making this additional provision is to insulate the company against any contingency which may arise this fiscal," Tripathi told PTI in an interview.
The housing finance company posted a net profit of Rs 189.38 crore in FY20, up 16.6 per cent from Rs 162.37 crore in the previous fiscal year.
The overall growth was fine for 2019-20 except for the last 10 days, he said, referring to the nation-wide lockdown imposed to curb the spread of coronavirus infections.
The lockdown restrictions have been gradually eased since June, aiding economic recovery.
"Economy is just now showing the improvement. In housing finance sector, 40 per cent of the pre-COVID level has come back and I expect that if further lockdown is not brought up and situation continues... then by December we can reach the pre-COVID level," Tripathi said.
By October, the sector can see revival by 65-70 per cent, he said.
"After that, by December-January, we will see (demand) going back to the pre-COVID level. That is what I feel, but the caveat is that there should not be any further lockdown or harsh measures because of the coronavirus spread," he added.
Even as demand is coming back in the affordable and low-cost housing sector, the major challenge remains that the borrowers, mostly belonging to the informal and low-income segment, are still in a 'survival mode', he noted.
Once they come to revival mode, then demand will definitely come back to normal, he said, adding currently loan demand is broadly coming from the self-construction housing space.
"In small locations people construct their houses and their demand is like Rs 8-10 lakh. They are mainly the people who have stable jobs like those working in the government sector, whose salaries are not impacted," he said.
The company has started contacting people for their loan requirement as the lockdown restrictions have been eased, he said, adding Aadhar Housing has also launched products for COVID-19 warriors.
"We have launched a product for them and have reduced the interest rate by 1.75 per cent and along with that we are also providing them one-year insurance," Tripathi said.
He said Aadhar Housing received more than 400 loan enquiries in June for its 'Covid-19 Warriors Griha Loan'.
"And I expect that the request will further go up," he added.
The company's total income during 2019-20 grew to Rs 1,388.46 crore from Rs 1,265.63 crore in FY19. The disbursements stood at Rs 3,190 crore.
Assets under management (AUM) at the end of March 2020 were at Rs 11,432 crore.
Aadhar Housing Finance is backed by private equity funds managed by Blackstone. The global investment firm had acquired 97.7 per cent stake in Aadhar Housing Finance Ltd in June 2019.
The buyout included the entire stake held by the then controlling shareholders -- Wadhawan Global Capital Limited (WGC), Dewan Housing Finance Limited (DHFL) and International Finance Corporation (IFC).
As of March 31, 2020, shareholding of Blackstone stood at 98.74 per cent.
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