Housing finance companies (HFCs) are expected to post modest earnings for the June quarter, as industry-wide loan disbursals rose about 8% year-on-year, analyst estimates show. However, margins are likely to come under pressure due to heightened competition from banks and the impact of recent rate cuts. Additionally, provisioning costs may rise amid slower recoveries, potentially resulting in flat growth in profit after tax. According to estimates by brokerage firm PL Capital, the assets under management (AUM) of HFCs are expected to surpass ?3.7 lakh crore as of the end of the June quarter, marking a 1% sequential growth. However, loan disbursals may decline by over 26% quarter-on-quarter due to seasonally weak demand. "Bank credit to HFCs has been slowing due to weaker demand, decelerating from 13.0% YoY in July 2024 to 9.0% in May 2025," said Gaurav Jani, analyst at PL Capital. "While banks' housing credit growth was tepid at 0.9% in May 2025, the increased liquidity in the system could lead to a slight pickup in housing credit, further intensifying competition for HFCs." Five Star Business Finance, meanwhile, is expected to report subdued loan growth and disbursements, as the company maintains a cautious approach amid ongoing asset quality and collection challenges.
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