Shriram Housing Finance expects a capital infusion of up to Rs 750 crore from its parent company, Shriram Finance, in early 2024. This anticipated boost in funds, though initially estimated at Rs 500 crore, aims to support Shriram Housing's ambitious asset management goals. The capital infusion is expected in late 2023 or early 2024 and may precede a strategic sale of a 10-20 percent stake or an IPO. Shriram Housing plans to borrow from various sources to fund its growth, including banks, the capital market, and non-convertible debentures.
Shriram Housing Finance, under the leadership of Managing Director and Chief Executive Officer Ravi Subramanian, anticipates a significant capital infusion from its parent company in the early part of 2024. This impending financial boost, likely to amount to Rs 500 crore, signals the housing finance entity's need for additional capital within the next three years. However, Subramanian is of the opinion that a substantial injection of Rs 750 crore would suffice to enable the company to reach its ambitious asset management target. Shriram Housing stands as a subsidiary of Shriram Finance, benefiting from the advantages of having a robust parent company.
Subramanian emphasizes the pivotal role of this support, highlighting that smaller housing financiers lacking such lineage struggle to secure leverage ratios of 3 or 4. In contrast, Shriram Housing comfortably aims for a leverage ratio of 7, confident that the necessary funds are readily available whenever required. Subramanian confidently predicts a capital infusion during the last quarter of the current year or the initial quarter of the next. This assertion aligns with Shriram Finance Managing Director and Chief Executive Officer YS Chakravarti's previous statement regarding the exploration of funding options for the housing finance subsidiary. These options encompass capital infusion, the strategic sale of a 10–20 percent stake, or an initial public offering.
Presently, Shriram Finance holds an 85 percent stake in Shriram Housing, contemplating a possible listing on stock exchanges. However, Subramanian underscores that the timing of such a listing must be strategically aligned with the company's focus on building profitability and a strong financial base. Shriram Housing's borrowing plans include securing around Rs 8,000 crore in the financial year 2023–24 and Rs 10,000 crore in the subsequent fiscal year. These funds will be sourced from various avenues, such as banks, the capital market, non-convertible debentures, and the National Housing Bank. Subramanian also anticipates the possibility of NBFCs and HFCs opening up lines of credit following HDFC's withdrawal from the market.
As of June 30, Shriram Housing's assets under management totalled Rs 9,539 crore. The company specializes in various segments, including loans against property, top-up loans, and construction finance, with an average loan size of Rs 17–18 lakh. The organization's strategic focus involves expanding its presence in approved project financing and micro-loans against property segments, albeit in a cautious manner. The collective goal is to achieve a monthly disbursal run rate of Rs 100 crore for these segments. By March 31, 2024, Shriram Housing aims to achieve assets under management amounting to Rs 15,000 crore, with combined assets under management in approved project financing and micro-loans against property reaching approximately Rs 350–400 crore.
Furthermore, the company is eager to establish additional co-lending partnerships with banks, building on existing collaborations with the State Bank of India (SBI), Punjab & Sind Bank, and Axis Bank. Subramanian envisions that direct assignment and co-lending activities will constitute 30 percent of the portfolio by March 2024, contributing to around 4-5 percent of the company's total assets under management through the co-lending route.
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