Gruh Finance grossly expensive but has robust financials: Akash Jain

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26 Aug, 2025 12:21

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Akash Jain

Gruh Finance Ltd, subsidiary of HDFC is jointly promoted by HDFC & AKFED, established on July 21, 1986, it commenced in 1988 from Ahemedabad, Gujarat.

Gruh Finance has been recognized by National Housing Finance Bank (NHB) for its refinance facility. It has a network of 175 retail offices across 12 states of the country. The company is a major beneficiary in the pickup of affordable housing segment which will improve its AUM growth.

We believe Gruh Finance is a quality company with robust financials. However, in terms of valuations of P/BV of 21x, it is grossly expensive. The company registered strong Q4FY18 earnings due to fall in provisions. Provisions for bad loans dropped 94 percent to Rs 1.4 crore on sequential basis. Standalone net profit for the quarter ended March 2018 stood at Rs 130.5 crore, which grew by 18 percent over a year-ago. Revenue from operations on standalone basis grew by 16 percent year-on-year to Rs 484.3 crore in January-March quarter 2018.

Historically, the company has enjoyed premium valuations owing to its robust asset quality with negligible gross NPAs. Gruh Finance has recommended the issue of bonus shares in the ratio of 1:1 (i.e. 1 equity share of Rs 2 each for each equity share held as on the record date to be fixed for the purpose) to the shareholders of the company. The board also recommended dividend of Rs 3.30 per share of face value of Rs 2 each for the financial year ended March 31, 2018.

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Akash Jain

Vice President Equity (Research)|Ajcon Global Services Ltd

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