Buy Dewan Housing; target of Rs 540: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal`s research report on Dewan Housing Finance Corporation“Dewan Housing Finance’s (DEWH) 2QFY15 PAT grew 18% YoY and 3.5% QoQ to INR1.52b. Healthy AUM growth of +28% YoY (+5.3% QoQ), margn improvement of 5bp YoY to 2.75% and stable asset quality with GNPAs of 78bp were the key highlights of the quarter.Business growth momentum remained strong during the quarter, with sanctions and disbursements growing at a faster clip by +38% YoY (3.6% QoQ) to INR61.2b and +30% YoY to INR42.6b respectively. AUM grew 28% YoY (+5% QoQ) to INR493.5b, while the loan book grew ~25% YoY (+4% QoQ) to INR447b. During the quarter, DEWH securitized assets worth INR7.4b. Off balance sheet AUM stood at INR46b; off balance sheet AUM share in overall AUM stood at 9.4% v/s7.2% in 2QFY14. Asset quality remains healthy, with GNPAs of 78bp (improved 1bp QoQ), while NNPAs were nil with PCR of 107%. Reported margins stood at 2.75%, up 5bp YoY. The improvement in margins was driven by a) increasing proportion of non-housing portfolio (LAP and commercial) and b) increasing proportion of bonds and replacing the same with high cost bank deposits.""DEWH continues to perform well on growth, margins and asset quality fronts. We expect the loan growth to remain healthy at a CAGR of ~23% over FY15E-17E. Margins continue to hold well thus demonstrating pricing power. Asset quality remains among the best, with GNPAs of just 80bp and almost zero net NPAs. Strong visibility on business growth and margins, superior asset quality, healthy provision cover and healthy return ratios are key positives. The stock trades at an attractive valuation of 1.1x/0.9x FY15E/16E BV. Maintain Buy with a target price of INR540 (1.5x FY16E BV),” says Motilal Oswal research report. 

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