GIC Housing Finance, a prominent player in India's housing finance sector, reported a 46.39 percent decrease in its net consolidated profit in Q2 FY24, with a profit after tax of Rs 30.19 crore, down from Rs 56.31 crore in the previous year. The company's net consolidated total income also dipped by 3.81 percent to Rs 270.19 crore from Rs 280.89 crore in the previous year. Factors contributing to this decline include stagnation in the Indian real estate sector, rising costs of funds, and increasing competition from banks and NBFCs. GIC Housing Finance is actively pursuing cost optimization and diversification to overcome these challenges.
GIC Housing Finance, a prominent entity in India's housing finance sector, disclosed a substantial 46.39 percent decline in its net consolidated profit during the quarter ending on September 30, 2023. In Q2 FY24, its profit after tax dwindled to Rs 30.19 crore, a stark contrast to the Rs 56.31 crore registered in the same quarter of the previous fiscal year, as reported in a filing to the Bombay Stock Exchange (BSE). The company's net consolidated total income for Q2 FY24 amounted to Rs 270.19 crore, a dip of 3.81 percent compared to the Rs 280.89 crore it posted in the corresponding quarter of the previous year.
In a significant move, the board of directors ratified the appointment of N. Ramaswamy as an additional director, specifically a non-executive director, and further designated him as the chairman of the board. As of September 30, 2023, the company's net worth was a substantial Rs 1,737.47 crore, accompanied by a debt-equity ratio of 5.02. The total debts to total assets ratio stood at 82.71 percent, the net profit margin remained at 11.17 percent, and the gross loan portfolio reached Rs 10,314 crore, with gross non-performing assets (NPAs) registering at 4.59 percent.
The downward trajectory in both net profit and revenue can be attributed to a confluence of factors. Foremost among them is the prevailing stagnation within the Indian real estate sector, characterized by high inventory levels, a dearth of demand, and liquidity challenges, resulting in a notable reduction in home loan applications and disbursements. This, in turn, has cast a deleterious shadow over housing finance entities like GIC Housing Finance. Rising fund costs, a common challenge in the financial sector, have also squeezed GIC Housing Finance's profitability.
The company, like its peers, heavily depends on borrowing from banks and financial institutions to support its lending operations. The increasing cost of funds has resulted in higher interest expenses, eating into the company's profits. GIC Housing Finance faces fierce competition as banks and NBFCs aggressively vie for market share in the housing finance sector. Banks offer competitive interest rates and attractive loan terms to expand their home loan portfolios, while NBFCs introduce innovative loan products and streamline loan processing, challenging housing finance firms like GIC Housing Finance.
Despite significant challenges, GIC Housing Finance is committed to improving its performance. The company focuses on cost optimization, operational efficiency, exploring new business opportunities, and diversifying its loan portfolio to enhance profitability and mitigate risks. In summary, GIC Housing Finance has reported a substantial contraction in its net profit and revenue during the second fiscal quarter. The genesis of this decline can be traced back to the sluggish pace of the real estate sector, the uptick in funding costs, and the heightened rivalry between banks and NBFCs. Nevertheless, the company remains resolute in its quest to elevate its performance and surmount these formidable challenges.
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