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Sell GRUH Finance
Investment Advisor SP Tulsian is of the view that one can sell GRUH Finance and take a shift in some other housing finance or maybe in some other stocks.
Investment Advisor SP Tulsian is of the view that one can sell GRUH Finance and take a shift in some other housing finance or maybe in some other stocks.
Tulsian told CNBC-TV18, "Gruh Finance is a subsidiary of HDFC in which HDFC is holding 62%. In fact it has been ruling at a very hefty PE multiple, I would say it is commanding very rich valuations because company is not likely to post an EPS of more than Rs 6-7 for FY07 and it is ruling at Rs 112. That means it is carrying a PE multiple of about 16 plus."
He further added, "Taking the case of other housing finance company like GIC Housing Finance , Can Fin Home , LIC Housing Finance , Ganesh Housing and there are so many others, they are all ruling at a PE multiple of 6-8. So I do not understand the justification because one is giving a PE multiple of maybe 18 or maybe 20 to HDFC. One can understand because HDFC is giant but there is no justification for giving a tiny company probably, which is just a subsidiary of HDFC, where HDFC is holding 62%, giving a valuation of 16 PE multiple."
"I do not see any growth really coming into the company, so I am not saying that fundamentally company is not good. Definitely it has a very good parentage, it has a consistency in its performance but I do not see any growth. I see really very stiff, very stretch valuations. So my advise would always be that one has better options available in housing finance company as GIC Housing, LIC Housing Finance, Ganesh Housing and maybe Dewan Housing like this there are so many other which are all ruling at a PE multiple of 6-8. So my advice is always better to sell this stock, maybe take a shift in some other housing finance or maybe in some other stocks, this will not going to outperform the market or even outperform the industry."
