Accumulate Dewan Housing, sell TRF, reduce Manappuram:Emkay

Emkay Global Financial Services has come out with its report on Dewan Housing Finance Corporation, TRF, Manappuram Finance and has recommended accumulate, sell and reduce rating on the stocks respectively in its research report dated February 8, 2013.

Dewan Housing Finance Corporation

Reco: ACCUMULATE
CMP: Rs 197
Target Price: Rs 260

Growth remains intact; retain ACCUMULATE

• DEWH Q3FY13 NII at Rs1.6bn (+32% yoy) and PAT at Rs912mn (+22% yoy) inline with our est. NIM (calc) at 2.5% intact even as non-retail loans declined 300bps qoq
• Individual loan grew 9% qoq and attributed for 5% qoq growth in overall loan. Disbursement grew 30%+ yoy and reflects immense growth potential in tier-II and tier-III cities
• First Blue Home Finance – Growth moderates further with loan (+13% yoy) and disbursements at 9% YTD. Superior  return ratios (RoA / RoE at 1.9% / 19.1%) provides respite
• DEWH remains insulated from competition in the mortgage space. Easing cost pressures, stable asset quality and capital provides comfort. Retain ACCUMULATE, TP of 260

TRF

Reco: SELL
CMP: Rs 201
Target Price: Rs 180

Disappoints yet again, Retain Sell

• Standalone performance improves with EBITDA margins at 7% and net profit at Rs10 mn (above estimates). But Projects segment continues to face cost over-runs
• Auto components disappoints with net loss of Rs50 mn – due to decline in domestic demand, high leverage and forex loss of Rs22 mn
• Consolidated debt continues to rise – up 5% qoq to Rs5.6 bn. Net DER at 3.5X – remains risk to earnings. Order book improves to Rs12.4 bn – though forward cover inadequate
• There exist near term headwinds in both standalone and auto components business. Retain Sell rating with price target of Rs180 per share

Manappuram Finance

Reco: REDUCE
CMP: Rs 39
Target Price: Rs 36

Continues to loose glitter; Auctions at all time high

• MAGFIL Q3FY13 results way below expectation with NII at Rs2.8bn and Net Profit at Rs844mn. A decline of 2.4%qoq in AUM and sharp drop in NIM’s of 122bps to 8.6% impacted NII
• Realignment of portfolio to lower LTV pdts and high auction rate continues to impact NIM’s and drive customer shifts. Lost 7% of customer base in 3 qtrs despite adding 400 branches
• The risks highlighted by us becoming more prominent – risks to margins not only from lower yields, as auctions remain high with stable gold prices, under-recovery poses further risks
• With final guidelines yet to come out, regulatory risks remain with likely cap on cash disbursals and interest rate. Maintain REDUCE rating with TP of Rs36

FIIs holding more than 30% in Indian cos

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