Broker Reports
BUY
Valuation view: DEWH is a focused play on low-ticket housing. While the company had been gaining traction in core affordable housing loans, it opportunistically diversified into non-retail loans over the past few years. However, this is expected to normalize and DEWH is likely to focus on its core strength of being a low-ticket affordable housing financier. Maintain Buy with a TP of INR300 (0.8x FY20E BVPS).
BUY
Outlook & Valuation: Current liquidity issue would completely reset midterm growth path and return ratios. We expect loan book to slowdown significantly over FY18‐20, driven by rising cost of funds. Considering, the above parameters, we have moderated our loan growth expectations for the company from 30% to 5% for FY2019E. We maintain our BUY on the stock, with our target price of INR300
BUY
Valuation: Despite having repaid its debt obligations, the company still has unused bank credit lines and proceeds from securitization in 3QFY19 so far to the tune of ~ INR 100bn. Hence we assume loan growth to remain stable (at a CAGR of 19% over FY18-20E and at 18% YoY in FY19E), considering lower prepayments and balance transfers. However, sell down of high yielding project portfolio could lead to loss of income; plans to recoup which are awaited from the management. With the near term overhang on NIMs and credit growth, we revise the target price to INR 286 (INR 743 earlier), assigning a P/ABV of 0.8X on FY20E ABV and maintain a BUY on the stock. Risks: Stress in project loans; pressure on yields owing to competition; growth in disbursements not translating to growth in AUM.
BUY
Valuation: As we had highlighted in our earlier event update on Banking sector, titled- “Bond yields at 4 year high; to push incremental CoF and MTM losses further ”, NBFCs and HFCs will see compression in NIMs, due to rising bond yields and tightening liquidity conditions. That said, DHFL’s strong ALM will help it maintain margins at current levels. Post the panic seen in the equity markets on Friday, the stock is currently trading at P/ABV of 1.0X, P/E of 5.6X FY20E. We expect stock to recover, if 2QFY19 results are in line with management’s guidance. Healthy growth in loan book, improving cost of funds on account of change in borrowing mix, improving cost efficiency and stable asset quality paints a positive picture for DHFL, hence we maintain BUY rating and maintain the target price at INR 743, assigning a P/ABV 2.1X of FY20E. Risks: Stress in project loans; pressure on yields owing to competition; growth in disbursements not translating to growth in AUM.
BUY
Valuation: The stock is currently trading at P/ABV of 1.9X, P/E of 10.5X FY20E. Healthy growth in loan book, improving cost of funds on account of change in borrowing mix, improving cost efficiency and stable asset quality paints a positive picture for DHFL, hence we maintain BUY rating and maintain the target price at INR 743, assigning a P/ABV 2.1X of FY20E. Risks: Stress in project loans; pressure on yields owing to competition; growth in disbursements not translating to growth in AUM.
BUY
Valuation: The stock is currently trading at P/ABV of 1.8X, P/E of 10.2X FY20E. Healthy growth in loan book, improving cost of funds on account of change in borrowing mix, improving cost efficiency and stable asset quality paints a positive picture for DHFL, hence we maintain BUY rating with a target price of INR 743, assigning a P/ABV 2.2X of FY20E. Risks: Stress in project loans; pressure on yields owing to competition; growth in sanctions not translating to growth in AUM.
BUY
Valuation: The stock is currently trading at P/BV of 1.8X, P/E of 10.6X FY20E. Healthy growth in loan book, improving cost of funds on account of change in borrowing mix, improving cost efficiency and stable asset quality paints a positive picture for DHFL, hence we maintain BUY rating and upgrade the target price to INR 743 (Prev. Target of INR 721), assigning a P/BV 2.1X of FY20E. Risks: Stress in project loans; pressure on yields owing to competition; growth in disbursements not translating to growth in AUM.
BUY
Dewan Housing Finance (DHFL) ended FY18 on a positive note. AUM gathered significant momentum—rose >30% (average 20% growth over the past two years)—on the back of robust >80% YoY disbursement growth in Q4FY18. This, along with stable NIMs at 3.03%, supported revenue growth and asset quality also remained stable (GNPLs at 96bps) with coverage of 110% (105% in FY17). However, better‐than‐expected revenue momentum was partially offset by elevated costs. Given presence in tier II/III cities, we expect DHFL to emerge key beneficiary of government’s Affordable Housing thrust. At 2.0x FY20E P/ABV, the stock trades at significant discount to peers given RoE potential of 16% plus. Maintain ‘BUY’ with TP of INR726.
BUY
Valuation view: DEWH is a focused play on low-ticket housing. This, along with the new-found opportunities in LAP and builder finance, is likely to keep its AUM on a high-growth trajectory. We believe the pressure on margins is temporary, and margins should revert to normal soon. The continued focus on cost rationalization is likely to result in higher return ratios and further rerating in the medium term. We upgrade FY19/20 EPS estimates by 8/5%. Maintain Buy with a target price of INR765 (2.1x FY20E BVPS).
BUY
BUY
BUY
BUY
Valuation view: DEWH continues to be a focused play on low-ticket housing. This, along with the new-found opportunities in LAP and builder finance, is likely to keep its AUM on a high-growth trajectory. We believe the continued focus on cost rationalization and a secular decline in cost of funds are likely to result in higher return ratios and further re-rating in the medium term. Buy with a TP of INR720 (2x FY20E BVPS).
BUY
Dewan Housing Finance (DHFL) reported yet another operationally strong quarter—PAT at INR3bn jumped 25% YoY driven by >30% revenue growth. The quarter was marked by robust >50% YoY growth in disbursements and consequent >29% AUM spurt (highest in over 10 quarters). This, along with stable NIMs at 3.03%, supported revenue growth. Cost rationalisation efforts continued—cost/income ratio fell to ~24% (25.9% in Q3FY17). Asset quality remained stable (GNPLs at 96bps) with coverage of 113% (107% in Q2FY18). Given lower ticket size and presence in tier II/III cities, we expect DHFL to emerge key beneficiary of government’s thrust on affordable housing. At 2.0x FY20E P/ABV, the stock trades at significant discount to peers given RoE potential of 15% plus. Maintain ‘BUY’.
BUY
Outlook & Valuation DHFL is bound to be a beneficiary of government’s initiative to promote affordable housing given its presence in tier II/III cities along with lower ticket size. Further, DHFL has also demonstrated its focus on the core mortgage space by divesting its non-core assets, such as the life insurance subsidiary. We believe its gradual transformation to a core mortgage player with strong growth and healthy return ratios would result in further re-rating. Hence, we continue to maintain BUY rating on the stock with a revised upward target price (TP) of Rs661 (2.2x FY19E P/ABV).
BUY
Valuation and view: DEWH continues to be a focused play on low-ticket housing. This, along with the new-found opportunities in LAP and builder finance, is likely to keep its AUM on a high-growth trajectory. We believe the continued focus on cost rationalization and a secular decline in cost of funds are likely to result in higher return ratios and further re-rating in the medium term. Buy with a TP of INR690 (2x September 2019E BVPS; implied 14x EPS).
BUY
BUY
ACCUMULATE
BUY
BUY
BUY
HOLD
HOLD
BUY
BUY
BUY
BUY
HOLD
BUY
BUY
BUY
BUY
HOLD
BUY
BUY
BUY
BUY
BUY
About
Dewan Housing Finance Corporation Ltd.
NSE: DHFL | BSE: 511072 | ISIN: INE202B01012 | Sector: Finance
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