Buy Dewan Housing; tgt of Rs 347: Arihant capital markets

3820 Investors following Dewan Housing. Share this News with them.

0

Like this story, share it with millions of investors on M3

Buy Dewan Housing; tgt of Rs 347: Arihant capital markets

Arihant capital markets is bullish on Dewan Housing Finance Corporation (DHFL) and has recommended buy rating on the stock with a target of Rs 347 in its August 1, 2011 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Buy IDFC; target of Rs 169: KRChoksey Accumulate Indian Bank; target of Rs 275: Unicon Investment Buy Sterlite Tech; target of Rs 70: KRChoksey ALSO READ See previous views by Arihant capital markets See what other Experts & Brokerages are saying about Dewan Housing See messages about Dewan Housing Dewan Housing BSE | NSE 01/06/12 Are Mutual Funds betting on Dewan Housing?

Arihant capital markets is bullish on Dewan Housing Finance Corporation (DHFL) and has recommended buy rating on the stock with a target of Rs 347 in its August 1, 2011 research report.

"Dewan Housing (DHFL) posted a healthy profit growth of 28% YoY at Rs 65.8 cr in a tough quarter which saw margin pressure due to rising interest cost. This was supported by a reasonable growth in business with disbursements growing by 22% and operating income growing by 36%. The guidance for growth remains healthy at 30% disbursement growth. The newly acquired subsidiary Deutsche Post was re-christened as First Blue Home Finance (FBHF) and its considerably strong performance in Q1 despite a de-growth in business, shows that the DHFL's expertise helped in bringing efficiency. On a consolidated basis the loan book of the group as a whole stood at Rs 21,352 cr with Rs 15,337 cr of DHFL standalone."

"First quarter being seasonally slow, 28% YoY growth in disbursements can be considered reasonably healthy. DHFL is confident of 30% disbursement growth in FY12 despite uncertain environment especially in relation to rising cost of property and rising interest rates. The confidence picks up partially from the belief that the LMI segment that it caters to, may not be as affected by the rate hike and the conservative credit sanction policy allows it scope to pass on the rate hikes. The disbursement in FBHF de-grew from ~ Rs 490 cr in Q111 to Rs 453 cr while DHFL Vysya saw a flat growth. Apart from rising cost of borrowings, NIM (2.85 % vs 2.96% in Q411) was under pressure due to lagged increase in lending rates (full impact in Q2). However with ~74% of the borrowings linked to base rate of banks, any increase in rates by banks will have an impact. But as 92% of loans are variable, the pressure on NIM can be minimised - though with a lag. As the average loan to instalment for Co. is as low as 40%, there is a better scope for absorption of hiked rates. On a longer term the Co hopes to maintain a NIM of 3% on the consolidated book."

"DHFL has increased its size reasonably through the recent acquisition and has been able to bring in efficiency in the new entity. Since affordability of property is becoming difficult, pressure on asset quality and growth cannot be ruled out. However the prospects of housing demand in the country remains quite strong and Cos conservative credit policy may allow it to pass through with lesser impact. The third largest housing finance Co in India is available at a steep discount to its peers trading at FY12E consolidated P/BV of ~0.8x and FY13E P/BV of 0.6x. We retain our recommendation of a "BUY" with a SOTP price target of Rs 347 over a period of 12-18 months giving a potential upside of ~66%," says Arihant capital markets research report. 

Quarterly Shifts by Morgan Stanley

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment