Vijay told CNBC-TV18, "Dewan Housing Finance Corporation is an interesting stock. People don't talk too much about it; they prefer to talk about LIC Housing . This company has a different business model. They are concentrating on Tier 2 and Tier 3 cities and lend to middle income families. Ticket size of their loans is much lower. They have a company in which they have a majority holding as a Joint Venture with Vysa Bank. They have now taken it over and are merging it with the parent. They took over Deutsche Postbank Holdings and that is also getting merged. So, one is going to get a much bigger balance sheet to play around with."
He further added, "The net interest margins are not that high, they are around LIC Housing's levels of about 2.9%. The loan growth is excellent; net provisions are pretty low at 0.7%. The trigger for this stock will come, apart from natural growth in the balance sheet things, from the fact that their liability side is pronouncedly with the banks 70% of their funding comes from bank only they pay 12%."
"They have changed tact in going more to NHB and the market for financing. I expect the NIM's to expand to about 3.4-3.5%. It is steadier, very attractive valuation at about 40% discount to LIC Housing and I don't see any reason for that to happen. The stock is trading at Rs 260. In the present bullish sentiment and the reemphasis of Housing in the scheme of things, I expect Dewan to be about Rs 400 in the next 15 months."
