Buy GRUH Finance; target Rs 262: Firstcall Research

Firstcall Research is bullish on GRUH Finance and has recommended buy rating on the stock with a target price of Rs 262 in its February 12, 2013 research report.

"GRUH Finance is engaged in the business of providing long term finance to individuals for construction, purchase, extension, repair and renovation of their homes. During the quarter, Gruh Finance shown the robust growth in the Net Profit and the profit increased by 23.99% to Rs. 288.90 millions. GRUH's fixed deposit programme has been rated “FAA” by CRISIL and “MAA” by ICRA. The rating of “FAA” and “MAA” indicates 'High Safety' as regards repayment of interest and principal. The Gross NPAs of the company are Rs. 26.74 crores (0.53% of the Loan assets) as against Rs. 36.66 crores (0.97% of the Loan assets) during the quarter. Disbursements during the nine months ended, amounted to Rs. 1490.71 crores as compared to Rs. 1001.19 crores during the corresponding previous year representing a growth of 49%. GRUH's deposit portfolio has increased to 6323.50 millions, up from Rs. 3572.50 millions last year. During the quarter Gruh Finance Ltd has allotted 1,30,195 equity shares of Rs. 2/- each pursuant to exercise of stock options by certain employees / directors. Net Sales and PAT of the company are expected to grow at a CAGR of 31% and 25% over 2011 to 2014E respectively.

GRUH Finance is primarily engaged in the business of providing long term finance to individuals for construction, purchase, extension, repair and renovation of their homes., reported its financial results for the quarter ended 31st Dec, 2012. The third quarter witness a healthy increase in overall sales as well as profitability on account of new service providing and expansion of regional network in the country.

The company's net profit jumps to Rs.288.90 millions against Rs.233.00 millions in the corresponding quarter ending of previous year, an increase of 23.99%. Revenue for the quarter rose 26.36% to Rs.1664.10 millions from Rs.1317.00 millions, when compared with the prior year period. Reported earnings per share of the company stood at Rs.1.62 a share during the quarter, registering 75.39% decrease over previous year period due to change of face value from Rs.10/- to Rs.2/-. Profit before interest, depreciation and tax is Rs.1480.60 millions as against Rs.1180.10 millions in the corresponding period of the previous year.

At the current market price of Rs.232.00, the stock P/E ratio is at 27.07 x FY13E and 23.26 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.8.57 and Rs.9.97 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 31% and 25% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 13.02 x for FY13E and 11.02 x for FY14E. Price to Book Value of the stock is expected to be at 7.67 x and 5.77 x respectively for FY13E and FY14E. We recommend 'BUY' in this particular scrip with a target price of Rs 262.00 for Medium to Long term investment," says Firstcall Research report.

Institutional holding more than 40% in Indian cos

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