Prime Stock Update: Moving this housing finance stock to “hold”
Find out why we are revisiting our call on this Prime Stock!
N V Chandrachoodamani
Chandrachoodamani started his capital market career in mid 2000s with Equity Intelligence India and then worked with several capital market Intermediaries in various roles over the last 15 years. Most of his career experience has been in equity research and PMS. Most recently, he was with MOAT, a PMS firm. He is a graduate in mathematics, a post graduate in finance, and holds a CFP certification. LinkedIn|Twitter
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3 thoughts on “Prime Stock Update: Moving this housing finance stock to “hold””
Amply clear sir. Thank you.
Excellent write up and a timely one sir. Three questions .
To just understand this better –
a) How can a NBFC company grow its AUM by a huge margin of 25% when disbursements growth is dismal at 7-8? Essentially, i want to understand what constitutes an AUM growth.
b) What is “credit due to fair value changes”? How did it come about and what caused this extraordinary income? Is it a common feature for all HFC-NBFCs?
c) What could be the reason for managment deciding from 730 days to 500 days for write offs? Shouldnt there be a standard set by RBI to force write offs? What is this number for other HFC-NBFCs?
Welcome your questions sir,
In the first place, disbursement has only slowed down to this extent in the first half of FY26. Management is still guiding for 20%+ growth in disbursements. But Aptus being a home loan NBFC with long tenures, the AUM also builds at a faster pace
What we are concerned is about Co. vacating the sub 7 lakh customer base when its average ticket size so far is ~10 lakh. So, we will have to wait and see on the growth and whether it will be able to retain the same 15-15.5% yield if it moves to higher ticket sizes
The second item, ‘fair value changes’ is a one-off, but common during changes in rate cycle
On the credit provisioning change from 730 days to 500 days, management is preponing the provisioning period where any secured loan continuing as NPA after 500 days will be provided for 100%. Earlier they used to wait until 730 days to enable recovery and then make 100% provision if it is not recovered. So, it is a bit early write-off than in the past, welcome step. But when such things happen, we will get a fair picture on quarterly write-offs (credit cost) only in upcoming quarters.
Because these stocks are priced to perfection in the market, minor changes cause reaction. That’s why these have to be given due importance.
Hope this clarifies.
Thank you
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