Buy Dewan Housing; target of Rs 300: Motilal Oswal

Motilal Oswal 's research report on Dewan Housing

Dewan Housing’s (DEWH) PAT declined 37% YoY to INR3.2b (18% below estimate) in 3QFY19. Over the past quarter, the company focused on liquidity management, while growth took a backseat. DEWH repaid INR179b of borrowings over the past three months, including INR100b of CPs. It raised INR163b of borrowings, largely from portfolio sell-downs. Hence, the off-BS book now accounts for 24% of AUM v/s 15% in 2QFY19. Management plans to increase this to 35-40% over the next few years.

Outlook

However, this is expected to normalize and DEWH is likely to focus on its core strength of being a low-ticket affordable housing financier. Maintain Buy with a TP of INR300 (0.8x FY20E BVPS).