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.