Moneycontrol
Last Updated : Jun 15, 2015 02:26 PM IST | Source: Moneycontrol.com

CRISIL assigns valuation grade of 3/5 to Indiabulls Housing

CRISIL Research has come out with its report on Indiabulls Housing Finance. The research firm has assigned valuation grade of 3/5 and fundamental grade of 4/5 to the company.

 
 
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CRISIL Research's report on Indiabulls Housing Finance


Indiabulls Housing Finance Ltd (Indiabulls) is one of India’s leading housing finance companies with retail mortgage assets under management (AUM) of Rs 397 bn and overall AUM of Rs 522 bn. Higher proportion of high-yielding assets and risk management capabilities have enabled the company to generate superior returns vis-à-vis peers while maintaining asset quality. Established position in the housing finance industry, wide distribution reach and management experience place it aptly to capture the industry growth potential. However, competition from commercial banks and maintaining asset quality in the risky commercial credit segment are monitorables. We initiate coverage on Indiabulls with a fundamental grade of 4/5, indicating that its fundamentals are superior relative to other listed securities in India.


Higher proportion of high-yielding assets has enabled Indiabulls to generate returns higher than that of peers. Around 50% of its loan book comprises home loans and the remainder consists of higher yielding loans against property (LAP) and commercial credit. Driven by a 2,300-member sourcing team and a network of 220 branches (of which 70% are in tier II/III cities), Indiabulls’ loan book has grown at a CAGR of 24% over FY12-15. Even though risky assets constitute a sizeable proportion of the company’s book, asset quality has been healthy with GNPAs being under 1% for the last three years, demonstrating its risk management capabilities.


We have valued Indiabulls by the price-to-book (P/B) multiple method. We have assigned P/B multiple of 2.7x to the FY17 adjusted book value per share of Rs 234 and arrived at a fair value of Rs 632 per share. At the current market price of Rs 582, the valuation grade is 3/5.


Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report.  The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.


CRISIL Limited. All Rights Reserved. Published under permission from CRISIL"


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First Published on Jun 15, 2015 02:26 pm
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