Morgan Stanley has cut its price targets on shares of lenders with real estate exposure including Edelweiss, Indiabulls Housing, LIC Housing and PNB Housing by 15-50% citing higher credit costs, slowing economy and shrinking profitability. “The credit crunch faced by real estate lenders has lasted a year, with no solution in sight,” said the brokerage’s analysts in a client note. “The economy is slowing, which will likely hurt housing demand. Risk of multi-year woes for these NBFCs is mounting.”Morgan Stanley said it expects a prolonged slowdown with shrinking Return on Equity (ROE). “…most of them will struggle to get funding to scale up the more profitable developer financing business and will have to both de-risk and de-lever from current high leverage levels to give fixed income investors comfort,” the note said. The brokerage retained its ratings on LIC, PNB and Indiabulls, while cutting Edelweiss to ‘equalweight’ from ‘overweight’.