Clix Housing Finance, a new player in the space is looking to tap into the affordable housing space in urban and semi-urban cities. Starting its operations in February 2018, Gaurav Pawra, Chief Executive Officer at Clix HFC believes there’s a huge opportunity in the affordable housing space.
Growth since inception
Clix HFC started in February 2018 taking some time to build policies and operations and decided to tap into the affordable housing segment. Gaurav says, “Today there are nearly 99 players in this space and majority of them recently launched with less than Rs 500 crore and it was basically in 2016 when PMAY was launched to promote the Housing for All and this is when the boom started and we started looking at this space.”
Pawra said, “We looked at various data points, economic indicators, industry, ground demand, delinquencies in different markets and gave a scoring to different markets to decide which locations we could chase, as the core aspect was competition as there are few locations where the competition intensity is very high, while there’s demand and the market is great but the competition is too high.”
“We zeroed in on a customer segment which is urban affordable or semi-formal and differentiate ourselves from a rural player. In the current context, it’s okay to not grow very fast but building a quality portfolio is of prime importance.”
Clix HFC disburses to self-employed customers who typically don’t chip in the banking policy framework.
Pawra said, “We basically cater to the segment of less than Rs 50 lakh and the sweet spot is somewhere around Rs 30 lakhs and our average ticket size is around Rs 23 lakhs. While we have a product which is up to Rs 1 crore but doesn’t match our appetite.”Clix HFC initially focused in Delhi and Jaipur to test out their policies and be sure of their customer journeys. He adds, “We created scorecards and used analytics and technology to underwrite these customers wherein we could bring in better turnaround time for efficiencies and conversion. Second year, we moved to Ahmedabad, Rajkot and Surat in Gujarat.”
Current Book size & Moratorium Saga
The current book size is approximately Rs 250 crore and as of March 2020 they had nil NPAs, says Pawra.
But as Covid-19 pandemic impacted everyone, so did Clix HFC. Most of their customers are self-employed, traders, etc. who were badly impacted due to lockdown and especially in cities like Delhi which was most impacted due to surging Covid-19 cases mid-2020 as compared to other centers where the economy recovered back quickly.
Pawra adds, “The good part was because they were all end users and the money was not taken for luxury, they were staying in the property and we track these loans about 78% were occupied as we do a re-check of our properties. We have an average 40% equity from these customers, so that was some comfort we had.”
On moratorium, Pawra adds, “The first phase in March – May around 48% of our books was in moratorium and in phase 2 it gradually improved and came down to 24% when the market started opening up, because a lot of these customers were sitting on cash, customers were holding money naturally as there was uncertainty coupled with the expectation around the supreme court ruling of deferment or waiver. Eventually people started paying off.”
He sees that approximately 15% of its customer base has still not recovered to go back to pre-covid levels and there people trying to see various options including sale of properties and some sold off assets to clear the loan.
He believes by March the normalcy could be restored and around 10% of the book is all put together who are looking at selling of property, restructuring, stressed borrowers as the existing book is concerned.
Cost of Funds & Fresh Disbursals
The cost of funds haven’t changed much but have gone slightly up. He adds, “We are not highly leveraged as our external borrowing is only Rs 45 crore and we’ve availed something recently and largely it was through equity and internal funding, not much impact there. There’s an impact on cost but more than cost there’s impact on getting liquidity as I said for us there’s no point to raise money if I can’t lend it appropriately, we’ve not increased rates nor have we changed the customer segment.”
He adds, “In our business it’s not that we’ve good cushion to cover credit losses, we are operating on an extremely thin margin. We chose between the top line and the quality of the book.”
On disbursals, He adds, “We started disbursals in August first week, prior to that we were doing top-up to existing customers nothing more. This business operates in a sanction pipeline and period of 60-90 days of pay-off we lost our sanction pipeline in March to August due to lockdown. And real estate was the first market to come back, which we thought was an old pipeline but we saw a lot of people going to buy new property.”
According to him the entire trend has been positive and all the levers (lower rates, push by state governments, etc.) have started firing and it’s not only the customer demand, pre-covid was anyways not the best space for real estate. It has been under stress since demonetisation, GST and RERA.
Clix HFC is focused on secured loans and Pawra adds, “I think overall if you see Covid has been a test for financial products, anybody who has passed covid well has cleared everything. This has been the biggest disaster considering the economy, income stream, customers financial health, etc. For us secured is doing extremely well especially this space where end use is monitored. The demand is there and we are bullish on this segment, open to partnerships and extend our business in markets where we are already present.”
Clix HFC is looking to expand into Southern and Eastern parts of India.
Pawra added, “We’ve done a few partnerships both offline and online and some partnerships where we can do some co-lending and add value to books. Not only 2021, JFM looks to be excited for Q4 in FY21.”
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Demand is there & we are bullish on affordable housing: Clix HFC CEO have 1211 words, post on bfsi.economictimes.indiatimes.com at January 7, 2021. This is cached page on WP Discuss. If you want remove this page, please contact us.