DEPARTMENT OF BUSINESS ADMINISTRATION

TEZPUR UNIVERSITY

NSE CERTIFIED CAPITAL MARKET PROFESSIONAL (NCCMP) SPRING 2021

A Project on Fundamental and Technical Analysis of Housing Finance

Companies in India

Under the guidance of: Submitted by:

Dr. Arup Roy Shivam Kakati
Associate Professor Research Scholar
Department of Business Department of Business
Administration Administration
Tezpur University. Tezpur University.
Declaration
I Shivam Kakati declare that this is an original work done by you, not copied from anywhere
else and you have not submitted this work for any other degree, diploma or certificate to any
other academic or non-academic institution.

Date: 15/07/2021
Place: Azara, Guwahati. Shivam Kakati
Table of Contents
Introduction ........................................................................................................................................... 1

Methodology .......................................................................................................................................... 2

Analysis .................................................................................................................................................. 2

Conclusion ........................................................................................................................................... 12

References ............................................................................................................................................ 12

List of Tables
Table 1: Showing various variables of fundamental and technical analysis ........................................... 2
Table 2: Showing Company-wise Risk and Return ................................................................................ 3
Table 3: Showing Financial ratios of the companies .............................................................................. 4

List of Figures
Figure 1: Showing 12 and 26 EMA of GIC Housing Finance Limited .................................................. 6
Figure 2: Showing MACD of GIC Housing Finance Limited ................................................................ 6
Figure 3: Showing RSI of GIC Housing Finance Limited ...................................................................... 7
Figure 4: Showing 12 and 26 EMA of Housing & Urban Development Corporation Limited .............. 7
Figure 5: Showing MACD of Housing & Urban Development Corporation Limited ............................ 8
Figure 6: Showing RSI of Housing & Urban Development Corporation Limited ................................. 8
Figure 7: Showing 12 and 26 EMA of Can Fin Homes Limited ............................................................ 9
Figure 8: Showing the MACD of Can Fin Homes Limited .................................................................... 9
Figure 9: Showing the RSI of Can Fin Homes Limited ........................................................................ 10
Figure 10: Showing the 12 and 26 EMA of LIC Housing Finance Limited ......................................... 10
Figure 11: Showing the MACD of LIC Housing Finance Limited ...................................................... 11
Figure 12: Showing the RSI of LIC Housing Finance Limited ............................................................ 11
Introduction
Housing is one of the basic prerequisites for human beings along with food, clothing and
education (Thingalaya, Moodithaya, & Shetty, 2009). Developing housing not only fulfils this
basic need but also bolsters growth in related sectors such as cement, steel, paint and many
more (Vinod Kothari Consultants, 2021). Due to the rapid population growth in India, the
demand for housing has been increasing over the years and is expected to continue in the future
(Thingalaya, Moodithaya, & Shetty, 2009). Under Pradhan Mantri Awas Yojna (PMAY)
scheme, even the Government of India is promoting the housing sector. Under this scheme, 20
million new homes will be built in the city centres and rural centres of India by giving interest
subsidies (Kotak Securities, 2021). However, this sector remains very volatile due to the
unstable interest rates and rising NPAs due to regular economic jolts in the sector. Events such
as the 2008 US housing bubble, 2017 implementation of GST, 2020 COVID-19 etc. had serious
implications on the incomes of the borrowers which trickle down to defaults and NPA. With
the introduction of the Real Estate Regulation and Development Act (RERA) in 2016, the
sectors took another hit as new housing projects dropped by 41 per cent (Knight Frank, 2017).
Nevertheless, experts are of an opinion that these are temporary jolts and the sector is expected
to boom in the future (Kotak Securities, 2021). Post COVID-19 lockdowns in Q1 of 2021, there
was an increase of 44 per cent quarter on quarter sales. In cities like Hyderabad and Pune, the
sales have gone up by 81 per cent and 75 per cent. This sector is clearly one of those sectors
that usually bounce back from its troughs.
In the Indian housing finance sector, companies like HDFC limited, Dewan Housing Finance
Limited, Indiabulls Housing Finance Limited, PNB Housing Finance Limited and LIC Housing
Finance Limited has 78 per cent of the market share (Kotak Securities, 2021). The big question
is where should the investors put their hard-earned money. There were prosing companies like
Reliance Home Finance Limited, Dewan Housing Finance Limited, Sahara Housingfina
Corporation Limited etc. that have fallen on their faces after achieving great heights in the
sector. What are the companies that are most likely to perform well in the near future? This
project report attempts to provide an answer to this question by conducting fundamental and
technical analysis on the housing finance sector stocks. The primary objective of the present
study is to find stocks that are fundamentally and technically strong and recommend the best
stocks to investors.

1
Methodology
The objective of the present study is to analyse the housing finance companies incorporated in
India using fundamental as well as technical analysis and present recommendations thereon.
The data was collected from the websites of the National Stock Exchange, Yahoo Finance and
Tradingview. The financial data for fundament analysis was not available for 2020-2021,
therefore, the financial data for the financial year 2019-2020 was used. This financial data
would also present a better picture of the financial performance of the companies since the
COVID-19 pandemic lockdown period is not taken into consideration. For other variables, data
up to the closing of 2nd July 2021 was used. Initially, 19 companies were selected, but due to
the unavailability of sufficient and appropriate data for the present study, only 16 companies
were analysed. The variables used for fundamental and technical analysis were as follows:
Table 1: Showing various variables of fundamental and technical analysis

Fundamental Analysis Technical Analysis

Daily, Monthly, Annually Risk and Return 12 and 26 period Exponential Moving
Average (EMA)
Dividend Yield Ratio (DYR) 14 period Relative Strength Index (RSI)
Growth Sales Turnover (GST) 9 period Moving Average Convergence and
Divergence (MACD)
Price Earnings Ratio (P/E)
Growth in Earnings Per Share (GEPS)
Return on Assets (ROA)
Return on Equity (ROE)
Price-earnings Growth Ratio (PEG)

Analysis
The analysis part is sub-divided into four parts. The annual, monthly and daily average risk and
returns of the companies are discussed in the first part. In the second part, the financial ratios
of the companies were discussed. The third part contains the results of GRA, where the stocks
were ranked on their fundamentals. Finally, in the fourth part, technical analysis was used to
assess the companies. The following table shows the risk and returns of the select companies.

2
Table 2: Showing Company-wise Risk and Return
Company Name Daily Daily Monthly Monthly Annual Annual
Risk Return Risk Return Risk Return
Housing Development Finance 14.82 0.51 8.77 2 31.24 25.84
Corporation Limited
LIC Housing Finance Limited 2.72 0.11 13 2.34 58.91 30.5
AAVAS Financiers Limited 2.76 0.21 11.89 4.36 65.29 45.30
Housing & Urban Development 2.68 -0.01 13.61 0.23 31.33 59.04
Corporation Limited
Indiabulls Housing Finance Limited 3.64 0.04 17.86 1.82 60.05 14.18
Can Fin Homes Limited 2.58 0.13 33.41 4.46 58.66 122.8
PNB Housing Finance Limited 2.94 -0.04 15.88 2.28 86.74 -11.102
Repco Home Finance Limited 2.57 0.07 13.29 1.71 77.3 30.29
GIC Housing Finance Limited 2.96 0.09 14.2 1.99 58.66 27.2
Dewan Housing Finance Corporation 3.75 0.24 18.51 2.14 75.72 30.48
Limited
SRG Housing Finance Limited 3.46 0.17 24 5 113.75 66.81
Akme Star Housing Finance Limited 4.02 0.19 16.5 3.68 105.82 57.72
Reliance Home Finance Limited 3.79 -0.35 27.79 -4.6 118.23 -9.97
Indbank Housing Limited 4.86 0.17 22.69 3.07 97.74 38.87
Sahara Housingfina Corporation 4.69 0.14 29.7 3.5 194.58 60.67
Limited
Parshwanath Corporation Limited 2.13 0.07 15.88 2.28 104.9 45.07

The above table contains the average daily, monthly and annually risk and returns of the select
housing finance companies. The returns were calculated by averaging the percentage change
in price as compared to the previous period closing price. The risk of the companies was
calculated by calculating the standard deviation of percentage change in the current closing
price as compared to the previous closing price. HDFC Limited was to be the most volatile
stock on daily basis as the daily risk associated with the company is 14.82 per cent. The
company also has the highest average daily return. Therefore, this stock is a good candidate for
intraday traders who have a large risk appetite. Companies such as HUDCO Limited, PNB
Housing Finance Limited and Reliance Home Finance limited were found to have negative
daily returns. Parshwanath Corporation Limited was found to have the lowest daily risk. This
is because the stock price and the daily volume is very low. Traders are generally not interested
in such stocks. On monthly basis, Can Fin Homes Limited was found to have the highest risk
as well as highest returns percentage. This stock would attract a large number of swing traders,
especially in the futures and options segment because of its high volatility. HDFC Limited was
found to have the lowest monthly volatility, while Reliance Home Finance Limited was found
to have the lowest (negative) monthly returns. Annually, HDFC Limited was found to have the

3
lowest volatility with a decent return. Can Fin Homes Limited was found to have the highest
average annual returns of 123 per cent. HUDCO and Can Fin Homes Limited were found to
have lower annual risk as compared to their returns. This gives investors a chance to make a
profit, even in the worst-case scenario. Thus, these three stocks are good candidates for
positional and long-term investment. Sahara Housingfina Limited was found to have the
highest annual volatility. Stocks like PNB Housing Finance Limited and Reliance Home
Finance Limited were found to have negative annual returns.
After analysing the housing finance companies based on their risk and returns, the next part
discusses the financial ratios for fundamental analysis. The following table shows the financial
ratios of the select companies:
Table 3: Showing Company-wise Financial ratios of the companies

Dividend Sales P/E

Company Name Yield Growth Ratio EPS ROA ROE PEG
Housing
Development
Finance Corporation
Limited 1.28 0.26 20.65 7.95 2.53 18.81 1.40
LIC Housing
Finance Limited 1.59 0.19 12.12 2.25 1.32 16.82 0.49
AAVAS Financiers
Limited 0.00 0.14 43.14 41.73 3.19 10.72 1.04
Housing & Urban
Development
Corporation Limited 6.13 0.23 7.70 27.12 1.97 11.59 0.39
Indiabulls Housing
Finance Limited 9.48 0.14 9.59 6.45 3.04 23.94 1.32
Can Fin Homes
Limited 1.55 0.26 22.27 11.14 1.55 16.09 0.79
PNB Housing
Finance Limited 0.56 0.23 18.83 15.49 1.17 11.33 0.50
Repco Home
Finance Limited 0.61 0.15 18.74 14.95 2.12 15.45 1.79
GIC Housing
Finance Limited 3.33 0.16 8.64 7.47 1.61 15.36 0.34
Dewan Housing
Finance Corporation
Limited 1.87 0.28 5.76 132.15 -0.49 12.57 0.22
SRG Housing
Finance Limited 0.03 0.58 35.99 45.59 3.76 14.08 -2.19
Akme Star Housing
Finance Limited 0.03 0.47 25.12 19.00 5.36 9.18 0.30
Reliance Home
Finance Limited 0.55 0.01 10.83 -269.63 -0.31 -4.25 -0.15

4
 Indbank Housing
Limited 0.00 0.26 29.00 211.33 -70.29 -0.39 -0.18
Sahara Housingfina
Corporation Limited 0.00 -0.02 18.92 0.70 1.48 6.77 0.17
Parshwanath
Corporation Limited 0.00 0.39 1.48 1.52 7.77 12.02 0.01

Indiabulls Housing Finance Limited was found to have the highest average dividend yield ratio.
This indicates that investors of Indiabulls Housing Finance Limited generally receives the
highest amount of dividend per rupee invested. Stocks like AAVAS Financiers Limited,
Indbank Housing Limited, Sahara Housingfina Corporation Limited and Parshwanath
Corporation Limited did not distribute any dividends to their shareholders in the last 10 years.
The SRG Housing Finance Limited was found to have the highest average growth in terms of
turnover. On the other hand, Sahara Housingfina Corporation Limited had a negative average
turnover growth. The average P/E ratio of Parshwanath Corporation Limited was found to the
lowest, indicating that it is available at the cheapest price. The average P/E ratio AAVAS
Financiers Limited was found to the highest among the select stocks, indicating to be very
costly as compared to others. Indbank Housing Limited had the highest EPS while Reliance
Home Finance Limited had the lowest EPS among the housing finance stock. Parshwanath
Corporation Limited provides the highest return on assets while Indiabulls Housing Finance
Limited provides the investors with the highest return on equity. The average PEG ratio of
companies like Housing Development Finance Corporation Limited, AAVAS Financiers
Limited, Indiabulls Housing Finance Limited and Repco Home Finance Limited was above
one while companies like SRG Housing Finance Limited, Reliance Home Finance Limited and
Indbank Housing Limited had a negative average PEG ratio. These stocks cannot be considered
for investment as they are either overpriced (PEG ratio more than one) or has negative growth
(negative PEG ratio).
Thus, it could be concluded that Parshwanath Corporation Limited is the best company in the
sector as it has the lowest P/E ratio, lowest positive PEG ratio and highest return on assets.
Indiabulls Housing Finance Limited is another option but the stock is overpriced according to
the PEG ratio. Housing & Urban Development Corporation Limited is a great option for
investing as the company provides returns, growth as well as dividends to its shareholders. The
price is also not over overpriced since the PEG ratio is between one and zero. Similarly, other
companies with similar attributes are GIC Housing Finance Limited, Can Fin Homes Limited,
Akme Star Housing Finance Limited, LIC Housing Finance Limited and PNB Housing Finance

5
Limited. Parshwanath Corporation Limited and Akme Star Housing Finance Limited has very
high annual volatility and that makes them very risky for investing. PNB Housing Finance
Limited has negative annual returns and that makes the stock unfavourable for investing. Thus,
it could be concluded that Housing & Urban Development Corporation Limited, GIC Housing
Finance Limited, Can Fin Homes Limited and LIC Housing Finance Limited were the four
stocks that are recommended to the investors for the long term. After identifying the stocks to
invest in using fundamental analysis, now the technical analysis is used. Three tools were used
EMA, RSI and MACD.
1. GIC Housing Finance Limited
Figure 1: Showing 12 and 26 EMA of GIC Housing Finance Limited

600

500

400

300

200

100

0
01-11-2005

01-11-2019
01-07-2002
01-03-2003
01-11-2003
01-07-2004
01-03-2005

01-07-2006
01-03-2007
01-11-2007
01-07-2008
01-03-2009
01-11-2009
01-07-2010
01-03-2011
01-11-2011
01-07-2012
01-03-2013
01-11-2013
01-07-2014
01-03-2015
01-11-2015
01-07-2016
01-03-2017
01-11-2017
01-07-2018
01-03-2019

01-07-2020
01-03-2021
Close 12EMA 26EMA

Figure 2: Showing MACD of GIC Housing Finance Limited

100

80

60

40

20

0
01-07-2016

01-03-2019
01-07-2002
01-03-2003
01-11-2003
01-07-2004
01-03-2005
01-11-2005
01-07-2006
01-03-2007
01-11-2007
01-07-2008
01-03-2009
01-11-2009
01-07-2010
01-03-2011
01-11-2011
01-07-2012
01-03-2013
01-11-2013
01-07-2014
01-03-2015
01-11-2015

01-03-2017
01-11-2017
01-07-2018

01-11-2019
01-07-2020
01-03-2021

-20

-40

-60

-80

MACD Signal Line

6
Figure 3: Showing RSI of GIC Housing Finance Limited

100
90
80
70
60
50
40
30
20
10
0
01-07-2002
01-03-2003
01-11-2003
01-07-2004
01-03-2005
01-11-2005
01-07-2006
01-03-2007
01-11-2007
01-07-2008
01-03-2009
01-11-2009
01-07-2010
01-03-2011
01-11-2011
01-07-2012
01-03-2013
01-11-2013
01-07-2014
01-03-2015
01-11-2015
01-07-2016
01-03-2017
01-11-2017
01-07-2018
01-03-2019
01-11-2019
01-07-2020
01-03-2021
The stock price of GIC Housing Finance Limited was found to be above 12 EMA but below
26 EMA. The MACD line was above the signal line indicating bullishness but both the lines
were negative. The RSI crossed 30 from below and is trending upside. Thus, it is recommended
to wait from 12 EMA to cross over 26 EMA and MACD to come in the positive zone.

2. Housing & Urban Development Corporation Limited

Figure 4: Showing 12 and 26 EMA of Housing & Urban Development Corporation Limited

100
90
80
70
60
50
40
30
20
10
0
01-10-2017
01-06-2017
01-08-2017

01-12-2017
01-02-2018
01-04-2018
01-06-2018
01-08-2018
01-10-2018
01-12-2018
01-02-2019
01-04-2019
01-06-2019
01-08-2019
01-10-2019
01-12-2019
01-02-2020
01-04-2020
01-06-2020
01-08-2020
01-10-2020
01-12-2020
01-02-2021
01-04-2021

Close 12EMA 26EMA

7
Figure 5: Showing MACD of Housing & Urban Development Corporation Limited

0
01-06-2017
01-08-2017
01-10-2017
01-12-2017
01-02-2018
01-04-2018
01-06-2018
01-08-2018
01-10-2018
01-12-2018
01-02-2019
01-04-2019
01-06-2019
01-08-2019
01-10-2019
01-12-2019
01-02-2020
01-04-2020
01-06-2020
01-08-2020
01-10-2020
01-12-2020
01-02-2021
01-04-2021
-2

-4

-6

-8

-10

-12

-14

-16

MACD Signal Line

Figure 6: Showing RSI of Housing & Urban Development Corporation Limited

70

60

50

40

30

20

10

0
01-12-2018

01-08-2020

01-02-2021
01-06-2017
01-08-2017
01-10-2017
01-12-2017
01-02-2018
01-04-2018
01-06-2018
01-08-2018
01-10-2018

01-02-2019
01-04-2019
01-06-2019
01-08-2019
01-10-2019
01-12-2019
01-02-2020
01-04-2020
01-06-2020

01-10-2020
01-12-2020

01-04-2021

The stock price of Housing & Urban Development Corporation Limited was found to be above
12 EMA and 26 EMA. The MACD line was above the signal line indicating bullishness but
both the lines were negative. The RSI is also in the bullish zone and below 70. Thus, it is
recommended to wait from 12 EMA to cross over 26 EMA and MACD to come in the positive
zone.

8
 3. Can Fin Homes Limited
Figure 7: Showing 12 and 26 EMA of Can Fin Homes Limited

12 and 26 EMA
700
600
500
400
300
200
100
0

Close 12EMA 26EMA

Figure 8: Showing the MACD of Can Fin Homes Limited

120

100

80

60

40

20

-20

-40
MACD Signal Line

9
Figure 9: Showing the RSI of Can Fin Homes Limited

100
90
80
70
60
50
40
30
20
10
0

The stock price of Can Fin Homes Limited was found to be above 12 EMA and 26 EMA and
12 EMA was above 26 EMA. The MACD line was above the signal line indicating bullishness
but both the lines were positive. The RSI is also in the bullish zone and below 70. Thus, it is
recommended to buy the stock now.

4. LIC Housing Finance Limited

Figure 10: Showing the 12 and 26 EMA of LIC Housing Finance Limited

800

700

600

500

400

300

200

100

Close 12EMA 26EMA

10
Figure 11: Showing the MACD of LIC Housing Finance Limited

MACD
100

80

60

40

20

-20

-40

-60

-80

MACD Signal Line

Figure 12: Showing the RSI of LIC Housing Finance Limited

100
90
80
70
60
50
40
30
20
10
0

The stock price of LIC Housing Finance Limited was found to be above 12 EMA and 26 EMA
and 12 EMA and 26 EMA is about to cross. The MACD line was above the signal line
indicating bullishness but both the lines were negative. The RSI is also in the bullish zone and

11
below 70. Thus, it is recommended to wait for MACD to turn positive and 12 EMA to cross
26 EMA

Conclusion
The study analysed 16 housing finance companies listed on NSE and BSE. The study used both
technical and fundamental analysis to provide recommendations on the stocks. The study used
fundamental analysis to find an answer to 'what to buy' and later used technical analysis to
answer ‘when to buy’. The study recommended the investors buy Can Fin Homes Limited now
and wait for stocks like Housing & Urban Development Corporation Limited, GIC Housing
Finance Limited and LIC Housing Finance Limited.

References
Knight Frank. (2017). Indian Real Estate. Mumbai: Knight Frank.
Kotak Securities. (2021, July 4). Four Things To Know About The Housing Finance Sector.
Retrieved from Kotak Securities:
https://www.kotaksecurities.com/ksweb/Meaningful-Minutes/Four-things-to-know-
about-the-housing-finance-sector
Thingalaya, N. K., Moodithaya, M. S., & Shetty, N. S. (2009). Housing Finance : A Study of
Experiences of Commercial Banks. Mumbai: Indian Institute of Banking and Finance.
Vinod Kothari Consultants. (2021, July 4). India Housing Finance Sector Report. Retrieved
from vinodkothari.com: http://vinodkothari.com/indian-housing-finance-sector-report/

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