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    Strongly believe in growth of 30% in next five years: R Varadarajan, Repco Home Finance

    Synopsis

    "We very strongly believe in the next three to five years also we will be able to clock the growth rate between 25% to 30% that is what we are envisaging."

    ET Now
    In an interview to ET Now, R Varadarajan, MD, Repco Home Finance, shares his business ideas. Edited excerpts:

    ET Now: What is the kind of CAGR on your book that you envisage for the next five years?

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    R Varadarajan: If you see in the past, we were able to have a CAGR of around 28% to 30%. Even last year if you see, our book growth grew at 28%.

    We very strongly believe in the next three to five years also we will be able to clock the growth rate between 25% to 30% that is what we are envisaging.

    ET Now: What is so great about this 25% number? Irrespective of how good the economy is, how bad the economy is, you grow at 25%. Why are your numbers so consistent?

    R Varadarajan: This is for housing. What we are focussing is mainly in tier II and tier III cities for home buyers for their individual needs. It is not for any investment. So if you see the investment, then you can say no it depends on the economy. But when you are focussing on the tier II, tier III cities particularly on the affordable section, definitely the trend will be the same. Everybody would like to have house of their own.

    It is the dream and when we fulfil their dreams, we very strongly believe we will be able to have the same growth of 25%. It should not be difficult. Even if you see the market size, about 63% is by the banks and some 37% is from the HFCs. But if you see the growth rate, HFCs were growing at around 20-22% and banks were growing at 18% as far as housing loan sector is concerned and that has also been consistent in the last two-three years if you see.

    ET Now: There are 40 players and when there are 40 players, there will be intense competition and India is not the most effective country in terms of rate transmission. So what happens to the spreads?

    R Varadarajan: Number one, what you have to see is the report of agencies like Crisil which has very clearly stated the penetration is very-very low. It is only around 10% and below. Therefore, the cake is very large. Now, in fact, I have been telling very frequently we should have more and more players to come in to cater to the needs of this segment.

    Earlier the housing finance companies were focussing only on salaried sector and particularly in the urban centres but now vast majorities, the people are in tier II and tier III cities and most of them are non-salaried.

    So therefore, as we earlier discussed, expertise is required in assessing their income and also underwriting their credit proposals. Therefore definitely more and more players can come and they will have same very good business that is what I feel.

    ET Now: Everybody is now pencilling in a maximum of 25 bps if not a 50 bps rate cut for the rest of FY17. Is that a bit of a dampener? Would you have hoped for inflation to be non-sticky and therefore more interest rate cuts coming in?

    R Varadarajan: No, I do not believe in that. Even if the present interest rate for the housing loan, I think it is really affordable to the home loan by us that is what I feel. It is almost stabilised that is what I feel as far as interest rate for housing loan is concerned.



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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