Shares of Repco Home Finance and PNB Housing Finance rallied by up to 18 per cent, hitting their respective 52-week highs on the BSE in intra-day trade on Thursday, in an otherwise weak market, amid heavy volumes.
LIC Housing Finance, GIC Housing Finance and Can Fin Homes were among other housing finance companies (HFCs) that too hit their respective 52-week highs in intra-day trade today as they gained between 4 per cent and 5 per cent. In comparison, the S&P BSE Sensex was down 0.61 per cent at 51,387 points around 01:15 pm.
The Reserve Bank of India (RBI) on Wednesday came out with a slew of directions related to maintenance of liquidity coverage ratio, risk management, asset classification and loan-to-value ratio, among others, for HFCs.
All non-deposit taking HFCs with an asset size of Rs 10,000 crore and above, and all deposit taking HFCs irrespective of their asset size will have to achieve a minimum liquidity coverage ratio (LCR) of 50 per cent by December 1, 2021 and gradually to 100 per cent by December 1, 2025.
No housing finance company shall grant housing loans to individuals up to Rs 30 lakh with LTV ratio exceeding 90 per cent and above Rs 30 lakh and up to Rs 75 lakh with LTV ratio exceeding 80 per cent.
The central bank said these directions, which shall come into force with an immediate effect, are aimed at preventing the affairs of any HFCs from being conducted in a manner detrimental to the interest of investors and depositors, the PTI reported. CLICK HERE TO READ FULL REPORT
According to ICICI Securities, this is a positive step for HFCs from a long-term view. RBI’s steps are in the right direction from a long-term perspective and will enable HFCs to manage risks more effectively. Also, the timeline is adequate to meet required ratios, which reduces the burden, the brokerage firm said in a note.
Among the individual stocks, Repco Home Finance surged 18 per cent to Rs 349, zooming 29 per cent in the past two trading days on the back of two-fold jumped in trading volumes. A combined 1.92 million equity shares have changed hands on the counter on the NSE and BSE. The stock surpassed its previous high of Rs 318.75 touched on February 19, 2020.
PNB Housing Finance too hit a 52-week high of Rs 475, up 10 per cent on the BSE in intra-day trade. The trading volumes on the counter rose three times with a combined 3.1 million equity shares having changed hands on the NSE and BSE so far.