Cholamandalam Securities' research report on Dewan Housing Finance Corporation
DHFL’s AUM grew to INR 1.3tn in 2QFY19 up by 38.4%YoY (higher than CSEC estimate of 33.8%YoY), led by healthy growth in Disbursements (39.4%YoY). Off balance sheet AUM fell to 15% of total AUM vs. 17% in last quarter. The management retains its earlier growth guidance of 20-24% YoY for the overall AUM, despite slower disbursements in 3QFY19 so far, taking cushion from lower than expected prepayments and balance transfers (as liquidity constraints are faced by competitors as well). Growth in loan portfolio was largely led by Home loans (24%YoY), LAP (71%YoY) and Project Loans (50%YoY) segments. SME segment also showed a robust growth of 88.7%YoY, albeit on a low base. Consequently, their share in the overall AUM was noted at Home loans: 57%, Project Loans: 16.5%, LAP: 22% and SME: 4.5%.
Outlook
However, sell down of high yielding project portfolio could lead to loss of income; plans to recoup which are awaited from the management. With the near term overhang on NIMs and credit growth, we revise the target price to INR 286 (INR 743 earlier), assigning a P/ABV of 0.8X on FY20E ABV and maintain a BUY on the stock.
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