Sundaram Home Finance is looking to consolidate its strong presence in the southern market given brighter growth prospects driven by infrastructure and real estate growth.
In addition to expanding in its traditional stronghold of Tamil Nadu, the Chennai-headquartered lender is also looking to strengthen its presence in Karnataka and Telangana this year.
The company opened its sixth branch in Hyderabad on Friday as Telangana has become a strong growth market where the company recorded disbursements of more than ₹430 crore in FY23. It is targeting disbursements of ₹500 crore in Telangana in 2023 on the back of infrastructure development.
Spurt in price
Lakshminarayanan D, Managing Director of Sundaram Home Finance, told businessline in April this year that the real estate prices in Hyderabad had defied all odds and gone up in successive years driven by the increase in land parcels.
He attributed the spurt in prices to the significant road infrastructure development in Hyderabad with road connectivity of the city to the outskirts, and the outskirts to the national highway.
Hyderabad registered a 5 per cent increase in per sq ft with prices averaging ₹6,400-6,600 per square foot during April-June 2023 when compared with the year-ago period, according to ProperTiger.com.
During the first half of 2023, Hyderabad, Chennai and Bengaluru together recorded a 51 per cent increase in demand for properties priced ₹1 crore and above when compared with the same pre-pandemic period of 2019. Hyderabad took the lead by recording 94 per cent growth when compared with 13 per cent by Bengaluru and 28 per cent by Chennai, it said.
In addition to expansion in Telangana, Sundaram Home is also looking to expand its presence in Karnataka.
The company, a wholly-owned subsidiary of Sundaram Finance Ltd, is planning to open four new branches in Karnataka in addition to expanding into four other locations through the Hub-and-Spoke model, he said.
Lakshminarayanan said the four hub-and-spoke locations would convert into full-fledged branches once they reach a certain threshold.
The company expects growth in Karnataka to be driven by business around the smaller locations where plot development and a preference for plot ownership and self-construction will be the growth drivers.
“In the near term, we are looking to expand our presence in the outskirts of Bengaluru and remote locations such as Mudhol and Chikodi,” he added.
Bengaluru recorded a 9 per cent increase in per sq ft with prices averaging ₹6,300-6,500 per sq foot during April-June 2023 when compared with the year-ago period.
The company had posted disbursements of about ₹525 crore in FY23 and it is targeting to end the current fiscal with disbursements of close to ₹600 crore in the State.