Tata invests big time in home finance sector, wants to become the next HDFC

In their dream to become the next HDFC, Tata group is all set for placing a big bon its home finance business in the next decade after a rapid growth in the business in the last 7 years.

The group is about to invest an amount of Rs 300 crore via Tata Capital after investing an amount of Rs 200 crore by subscribing convertible preference shares so far this fiscal year. The group has already invested a total amount of Rs 700 crore in the home loan company until August.

"We plan to become another HDFC. That's our goal," R Vaithianathan, managing director at Tata Capital Housing Finance told ET. "The promoters have infused money every year since we started in 2009. Last year, we raised Rs 350 crore through convertible preference shares and this year we will raise Rs 500 crore, out of which Rs 200 crore has already come,” he further added.

The company’s loan book has been growing at an annual rate of 45-50%, since the starting of disbursing loans in 2009. The loan book had risen to Rs 15,300 crore at the end of August, up from Rs 13,000 crore in March. The aim however, is to reach upto Rs 30,000 crore by March 2018 and cross Rs 1lakh crore by 2022.

"Our main growth will come from demand for home loan financing from tier-II and tier-III towns and outskirts of metros with an average ticket size of Rs 60 lakh. But we will also grow in construction finance and affordable housing, which is a focus for the government," Vaithianathan told ET.

Net profits increased around 67% to Rs 175 crore in March 2016 from Rs 105 crores in March 2015. Though, Tata Capital’s home loan venture is still very young and small in comparison to HDFC.

But Vaithianathan said, "Tata Capital Financial Services has an around Rs 25,000-crore book. Entity wise, the housing finance is the biggest book. The growth opportunities are very good,”
(image:Reuters)