HUDCO, NBCC and other Housing Stocks Jump 9% as Government Approves 3 Crore More Houses under PMAY

In early morning trading today, shares of HUDCO and NBCC experienced a significant surge, even as broader market indices remained relatively stable. This rise in stock prices for these government-backed firms followed the new Cabinet's inaugural meeting on Monday, where they approved government support for building three crore houses under the Pradhan Mantri Awas Yojana (PMAY). The PMAY is a housing initiative launched by the Government of India in 2015.

HUDCO, known for its substantial involvement in affordable housing finance, saw its shares rise by 8.5% in intraday trading, reaching ₹290. Similarly, NBCC, which gains from construction-related activities, experienced an 8.4% increase, with shares hitting ₹155. Home First Finance Company saw an 11% rise to ₹961.60, Aavas Financiers jumped 9% to ₹1,893, and GIC Housing Finance increased by 8% to ₹238.55. Additionally, Can Fin Homes, Indiabulls Housing Finance, and Star Housing Finance recorded gains in the range of 2% to 3%. In contrast, the BSE Sensex was up by 0.24%, standing at 76,673 as of 11:39 am IST.

In its inaugural meeting chaired by Prime Minister Narendra Modi on Monday, the Union Cabinet approved government assistance for constructing 3 crore houses under the PMAY. The Government of India has been implementing the PMAY since 2015-16 to support eligible rural and urban households in building houses with essential amenities.

Know more about Pradhan Mantri Awas Yojana Features, Types & Objectives

PMAY is designed to offer affordable housing to economically weaker sections (EWS), low-income groups (LIG), and middle-income groups (MIG) by providing financial assistance and subsidies for construction or renovation. This initiative coincides with the government's launch of a new housing scheme under PMAY (Urban), featuring interest subvention for urban poor and middle-class individuals. This scheme is scheduled to conclude in December 2024.

The new announcement is expected to revive the construction of homes under the existing scheme, focusing on completing the houses already sanctioned rather than approving new ones. According to the scheme's website, 11.8 million houses have been sanctioned so far, with 8.35 million of these completed.

Additionally, under PMAY (Gramin), managed by the rural development ministry, the government aimed to construct 29.5 million houses by March 31, 2024. As of November 2023, over 29.4 million houses had been sanctioned, with 25 million completed. Both housing schemes are flagship welfare initiatives of the government. Over the past decade, a total of 42.1 million houses have been completed for eligible poor families under these schemes.

Both HUDCO and NBCC have achieved remarkable multibagger returns over the past year. NBCC's share value has increased by 93% in the last six months, nearly 266% in the past year, and 381% over the last two years. In February, NBCC stock reached an all-time high of ₹176.85. Similarly, HUDCO shares have surged 380% in the past year and delivered a 693% return over the last two years.

The expanding Indian economy is expected to result in a growing middle-class population, creating a consistent opportunity for Housing Finance. States such as Gujarat, Maharashtra, Tamil Nadu, Andhra Pradesh, Telangana, and Karnataka account for approximately 60% of the country's affordable housing finance market.

Uttar Pradesh, Madhya Pradesh, and Rajasthan are significant emerging markets in the affordable housing sector, driven by the accelerating pace of industrialization and urbanization in these regions. Home First Finance anticipates that the next phase of growth will stem from these states and plans to expand its presence in these markets in the coming years.