Sundaram Home Finance plotting growth in TN’s tier III, IV locations

CHENNAI: The actual impact of interest rate hikes by the Reserve Bank of India is yet to be felt by the realty sector, opines Lakshminarayanan Duraiswamy, MD, Sundaram Home Finance. This after the city-based entity saw its net profit surging to Rs 97.50 cr on disbursements of Rs 1,736 cr for the first half year ended September 30, 2022.

Noting that housing demand had not slowed down due to the rate hikes, he said people continued to buy properties of all sizes from homes to villas. “Festive demand, especially in south, has kept the momentum with companies showing a strong quarterly performance,” he said, adding only when the April demand plays out will the impact of inflation and rate hikes be discerned.

While global factors drove inflation and other fiscal measures, developers and builders confirm that there has been no letup in demand. “Rather than rate hikes, it is prices that have played a major role in decision-making. The number of enquiries has been healthy in all the segments and we are happy with the pace of growth in the first half, this year. Our intent is to continue to grow leveraging the positive environment,” he said, adding “we hired over 150 people in the first half and will be hiring another 100 in the second half. Our hiring plan is a reflection of how we see the business prospects. There is a fair bit of optimism in this sector and we are confident of taking advantage of the opportunities.”

“Over the last year or two, the disbursements growth in tier 2 and 3 towns have been much faster than the metros. We are seeing smaller markets coming of age in terms of the scaling up of the economy there. Technology adoption is also on the rise in these locations and that is an important development leading to ease of doing business,” he said, in an interaction with DTNext.

In fact, plot sales have been making a comeback, Lakshminarayanan said, attributing the uptick to the entry of reputable builders. “Big builders have been buying large parcels and selling as plots as the risk factors are largely mitigated. Buying from big builders is a safer proposition as they are able to offer common amenities unlike individuals involved in land sale.”

As part of its expansion plan, he said “we will be opening close to 20 new branches in TN, Karnataka, AP and Telengana this year. Our growth is largely volume-driven. Our intent is to grow retail. Going to remote locations endorses that thought process. Our average ticket size in tier 2 and 3 towns is about Rs 30 to 35 lakh, whereas in cities, it is in the Rs 60 to 75 lakh range.”

The launch of business loans as a product last month has led the home finance company to enter tier III and IV locations to set up seven more exclusive branches in TN besides existing branches in Madurai, Tenkasi and Theni. “Market evaluation and portfolio size made us look at the next set of smaller towns such as Salem, Rasipuram, Tirunelveli, Aruppukottai and Rajapalayam,” said Lakshminarayanan, and added it called for a lot of understanding to lend to this segment comprising essentially the unorganised sector.