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Reiterating the growth potential of India’s housing market, Parekh said, “There has been consolidation and cleansing in the Indian real estate sector. Weak players have been pushed out of the market.” “The recent new launches have been by strong, reputed developers and this means that home buyers too have the confidence to play safe and choose under-construction properties once again instead of prioritizing just completed projects.”
The interest rate hike by the Reserve Bank of India (RBI) is also unlikely to impact the demand for homes as the current interest rates on home loans are still below pre-pandemic levels. Parekh said though the hike in interest rates could impact HDFC’s margins in the short term as there has been a delay in rate transfer.
In April, HDFC had announced its plans to merge, citing favorable interest rates and regulatory landscape. Parekh said the company has applied for regulatory approval and will respond to shareholders’ queries regarding the merger at the Extraordinary General Meeting (ECM), which will be convened after the merger is approved.
HDFC Board has recommended a dividend of Rs 30 per equity share for the financial year 2012.
Despite declining growth expectations, India is still expected to be one of the fastest growing major economies, with GDP growth projected to exceed 7% for the current year.
“India’s growth is largely driven by domestic consumption… Agricultural growth remains strong. Foodgrain production of 316 million tonnes is at a record high and, unlike many countries today, India has substantial buffers and thus on food security.” No worries,” Parekh said. “The capacity utilization level is now at 74.5% – near the point where new investments start… All these factors augurs well for India’s growth potential.”
He said that while inflation expectations are likely to remain above the RBI’s comfort zone of 6% over the next three quarters, the rise in India’s inflation rates is not due to high demand. “The root of India’s current inflation is the supply side – driven primarily by higher oil and commodity prices, which in turn increase due to geopolitical tensions. Once the supply chain disruptions subside, India’s There is also a possibility of a fall in the inflation rate.”
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