India Shelter Finance share price gains 16% in June so far; what’s driving the rally?

So far in June, India Shelter Finance Corporation share price has climbed by around 16%. ICICI Securities in its recent report maintained a buy call on India Shelter Finance Corporation, with a target price of ₹800. The brokerage expects an further upside of 16-23%. 

The brokerage justified its reasoning by citing India Shelter's FY24 annual report, which emphasises the company's goal of sustaining 30-35% YoY growth in the near future through 'purpose, integrity, and technology'.

India Shelter Finance strives to assist underserved clients in tier 2-3 cities (90% of borrowers); integrity - transparency in customer service and business practices; and technology - simple and secure access to the company's goods and services. Deepening presence in current 15 states (94% of the mortgage business) by opening 30-40 branches every year.

Also Read: Ambuja Cements share price jumps 3% as Penna Cement acquisition seem value accretive; analysts bullish on Adani firm

On Friday's session, India Shelter Finance share price opened at an intraday low of ₹660 apiece on BSE, the stock touched an intraday high of 693 apiece. India Shelter Finance Corporation share price gained nearly 4% on Friday's flat trade. India Shelter Finance share price was listed on the bourses in December 2023, and the stock has since gained 27%. 

According to Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, this is a low volume stock but has gained traction in the June month, up around 16%. The upward momentum could continue in the near term towards 725, and support is seen around 655. One should, however, not be aggressive on this counter as it is a low volume stock.

Brokerage house, ICICI Securities stated that India Shelter has been at the forefront of providing friction-less end-to-end digital credit solutions to its customers since its inception, with salesforce adoption in 2013 and one of the industry's lowest turnaround times of 4 days (onboarding to sanction) reflecting its unwavering focus on developing tech-enabled business processes. 92% digital collections, 99% E-Nach requirements, and 98% e-signing in FY24 demonstrate high tech penetration.

Also Read: Suven Pharmaceuticals share price rises 5% on CDMO firm Sapala Organics acquisition announcement.

The brokerage noted two key risks: weaker growth compared to projections of more than 30% in FY25/26, and deterioration in portfolio quality.

On June 10, the Union Cabinet authorised government funding for the construction of three crore dwellings via the Pradhan Mantri Awas Yojana (PMAY).

In a recent interview with CNBC-TV18, Rupinder Singh, MD & CEO of Gurugram-based housing financier India Shelter Finance Corporation, stated that plans such as PMAY foster growth. Such efforts have the potential to improve growth by 10-12% for any affordable housing financing provider, not only India Shelter.

As per CNBC-TV18 news report, Singh stated that the administration has a lot planned for the first hundred days, and he anticipates some favourable developments for the home finance industry in the next Budget in July.

Housing loans account for approximately 60% of India Shelter's loan book, with the remaining 40% dedicated to loans against property. The PMAY policy covers around 10-12% of all home loans, according to CNBC-TV18 news report. 

Also Read: Kotak Institutional raises target price for Adani Ports and SEZ to ₹1,650, says outperformance can continue for long

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.