Buy Dewan Housing; target of Rs 559: Motilal Oswal

Motilal Oswal's research report on Dewan Housing

Dewan Housing Finance’s (DEWH) 4QFY17 PAT grew 31% YoY to INR2.48b (excluding the gain on the sale of 50% stake in the life insurance subsidiary). Strong AUM growth, a YoY reduction in C/I ratio and an improvement in spreads were the highlights of the quarter.

Outlook

We believe its gradual transformation to a core mortgage player with strong growth and healthy return ratios would result in further re-rating. We upgrade FY18/19 EPS estimates by 5%/6% to factor in better margins and stronger growth. Buy with a TP of INR 559 (1.8x FY19E BVPS).