Dewan Housing Finance Corporation Limited DHFL is a deposit-taking housing finance company. The Company focuses on providing financing products to the lower and middle-income segments in India, primarily in Tier II and Tier III cities, and towns. It offers Housing Loan and Non-Housing Loans. It offers loans for construction or pay for residential property and loans against property. Also offers a range of home loan products, such as home loan, home extension loan, home improvement loan, plot loan, mortgage loan, small and medium enterprises (SME) loan, project loan and nonresidential property loan. Company’s deposit products include Aashray Deposit Plus-Individuals, Aashray Deposit Plus-Trusts & Institutions, Swayamsidha Deposit for Women and Wealth2Health Fixed Deposit.
|Recommendation||Price||Target Price||Time Horizon|
|Accumulate (Rs 280-240)||Rs 280||Rs 345||9-12 Months|
Net profit of Dewan Housing Finance Corporation rose 31.66% to Rs 244.77 crore in the quarter ended December 2016 as against Rs 185.91 crore during the previous quarter ended December 2015.
Sales rose 25.53% to Rs 2365.51 crore in the quarter ended December 2016 as against Rs 1884.37 crore during the previous quarter ended December 2015.
The AUM of the company increased 19% yoy to Rs 78295.81 crore at end December 2016 from Rs 65962.2 crore at end December 2015. The disbursements increased 10% to Rs 7059.43 crore, while the loan sanctions moved up 2% to Rs 9459.41 crore in the quarter ended December 2016 over the corresponding quarter of last year.
On asset quality front, company’s Gross NPA ratio remained flat at 0.95% at end December 2016 on sequential basis. Meanwhile, Net NPA ratio continued to be nil at end December 2016. The NPA coverage ratio was robust at 101.5% at end December 2016.
The Indian housing finance industry is growing reckless. As mortgage lending is a strong driver of growth for both housing demand and construction of houses in the country, consequently, the Housing Finance Companies (HFCs) have witnessed an increase in total outstanding loans with a CAGR of 26% between financial year 2009-2010 and 2014-2015. During the same period, the growth in total loans outstanding in the industry (i.e. Banks and HFCs) was 19%-20%.
The company has reported EPS of Rs 25.69. And going forward we expect company to deliver Rs 30-32 FY17E, on these earnings the company is available at a PEx of 8.75x FY17E. Hence the scrip can be accumulate between Rs 280-240 for the target of Rs 345 for a time frame of 9-12 months.
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