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Sundaram Home Finance aims to boost its loan approvals to INR 1,000 crore in non-southern states this fiscal year. Fuelled by the growing demand for mid-segment home loans in tier 2 and 3 towns, the company plans to expand beyond its traditional southern markets. With a focus on competitive rates and loans around INR 35 lakh, Sundaram Home has already achieved a 27% growth in total disbursements, reaching INR 5,000 crore in FY24. Strategic expansions in Rajasthan, Madhya Pradesh, Gujarat, and Maharashtra are set to further drive this growth, capitalizing on rising homeownership aspirations in smaller cities.
Sundaram Home Finance, in South India, is making a strategic move to expand its reach across the country. The company aims to achieve a significant increase in disbursements (loan approvals) outside its traditional southern markets, targeting a total of INR 1,000 crore in non-southern states for the current fiscal year. Advertisement
This ambitious goal is fuelled by a growing demand for mid-segment home loans, particularly in tier 2 and 3 towns. With economic activity on the rise and an increasing middle class in these smaller cities, there's a surge in homeownership aspirations. Sundaram Home recognizes this shift and aims to cater to this segment by offering competitive rates and loan options, specifically designed for loans around INR 35 lakh.
The company has already seen impressive growth, crossing the INR 5,000-crore disbursement mark in FY24, a 27% increase compared to the previous year. This success was driven by strong demand in southern markets and strategic expansion into non-southern states like Rajasthan, Madhya Pradesh, Gujarat, and Maharashtra. These markets show immense promise for Sundaram Home's mid-segment home loan business.
Lakshminarayanan D, Managing Director of Sundaram Home, highlighted the company's focus on tier 2 and 3 towns. He explained that as they expand, they will concentrate on the mid-segment in smaller towns to drive disbursements. The typical loan size in these areas is around INR 35 lakh, making it a very attractive market for them. This focus aligns with the growing national trend of rising homeownership aspirations in smaller cities.
It's important to note that Sundaram Home's non-southern disbursements started from a much lower base. In 2020-21, when Lakshminarayanan took over, the figure stood at only INR 60 crore. However, through strategic expansion and catering to mid-segment demand, the company has achieved remarkable growth. Disbursements in non-southern markets have increased over tenfold in the last three years, reaching around INR 700 crore. This growth is reflected in the contribution from outside the South region to total disbursements, which has risen from around 5% in FY21 to 15% currently.
With ongoing expansion plans, Sundaram Home expects even greater contributions from Rajasthan, Madhya Pradesh, Maharashtra, and Gujarat in the coming years. The company is particularly bullish on tier 2 and 3 towns in these states, where strong economic activity, a rising middle class, and affordability are driving the home loan market. Sundaram Home is confident that their focus on mid-segment loans in these growing markets will translate into significant business growth, potentially solidifying their position as a national leader in home financing.
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