Staying away from NBFC and HFC stocks as they’re expensive: Srinivas Rao Ravuri of HDFC AMC

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Published: November 16, 2017 5:19:39 PM

Even as experts point out that a stock market correction might be in the offing, Srinivas Rao Ravuri of HDFC AMC says that NBFCs and HFCs appear to be particularly expensive and the company is staying away from the space.

PMAY, carpet area increased, union cabinet increase carpet area, CLSS, middle inome group carpet area increased, MIG-I, MIG-II, ravi shankar prasad, union minister Credit Linked Subsidy Scheme, CLSS, house shortage, urban poor, PMAY NEWSSrinivas Rao Ravuri of HDFC AMC says that the housing theme in India is more than just HFCs, and includes steel, cement, paints, tiles and plywood  (Image: Reuters)

Even as experts point out that the stock markets is going through a consolidation phase, and a stock market correction might be in the offing, Srinivas Rao Ravuri of HDFC AMC says that NBFCs and HFCs appear to be particularly expensive and the company is staying away from the space. In an interview to ET Now, Srinivas Rao Ravuri, Senior Fund Manager – Equities, HDFC AMC said, “HFCs are quite expensive. The entire NBFC space valuations are quite demanding and so we are not betting too much on NBFCs. We want to play through the wider value chain of building a low-cost housing rather than housing finance companies.”

The expert pointed out that the theme of housing is more than just housing finance companies. “When you actually spend let us say Rs 30 lakh to buy a house, where does that Rs 30 lakh go? When we looked at the value chain, it is not just housing finance companies but also steel, cement, paints, tiles, plywood. The entire spectrum would actually benefit from this increases spend on housing. We said let us pick business in each of these segment,” he pointed out.

The latest government reforms in the space has led to many experts turning bullish on the prospects of housing in India. In an interview to ET Now, Mahesh Nandurkar, India Strategist, CLSA said, “One of the themes that we have been very positive on for some time now is the housing construction segment. What we sort of say is that over the last five years, the housing market has not really done anything. Both in volume terms and in value terms, the market has stayed flat and we feel that the housing sector is now at the tipping point and the improvement should be likely going forward because of two factors — the primary factor is the housing affordability measured as mortgaged payments to household income has gone down to an all-time low.” 

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