Dewan Housing

I agree Dewan Housing is looking good. It is presently quoting a P/BV of 1.8 which is cheap compared to the valuations of 5.29 for Repco. Even LICHF and CanFin are quoting at slightly more expensive valuations of 2.88 and 2.03 than Dewan.

I have both, Repco and Dewan, in my portfolio and intend to hold on for a long-time.

 

For Banks & NBFCs, money is stock-in-trade. They borrow at x rate and lend at x+ rate. So, high levels of leverage/ debt is natural. What they have to ensure is to remain within the capital adequacy norms prescribed by the RBI.

What we, as investors, have to watch out for is the stringency of the credit appraisal process. Lending money is an easy business because there is no dearth of borrowers. However, who you lend it to and whether you can recover it in time is the difficult part. Because of the high levels of leverage, is the debt goes bad, it can threaten the existence of the lender.

The stringent credit appraisal process is why lenders like HDFC Bank and Gruh Finance command such high premiums as compared to other lenders, especially the PSU Banks.

 

Please see the initiating coverage research report by IndiaNivesh on Dewan Housing:

"Dewan Housing Finance Corporation (DHFL) was incorporated in 1984 by Shri Rajesh
Kumar Wadhawan. DHFL primarily provides housing finance to individuals, especially to
the low and lower-middle-income groups in Tier II, Tier III and Tier IV cities. The company also offers non-housing loans such as loan against properties (LAP) and developer loans. DHFL has a total AUM of Rs 526 bn with pan-India presence, with customer touch points at 574 locations as of December 31, 2014. DHFL operates in the mortgage financing business where growth and asset quality have remained healthy in the last few years."

https://rakesh-jhunjhunwala.in/stock_research/StocksDB/topic/dewan-housing-initiating-coverage-research-report-by-indianivesh/dewan_housing_finance_corporation_initiating_coverage_apr_2015/

 

DHFL great buy: Prakash Diwan

Prakash Diwan of Altamount Capital Management told CNBC-TV18, "Housing finance is what we think is changing into a very different paradigm of sorts. Couple of developments that have quietly happened. One is this real estate regulatory bill that has come in. It is like the neighbourhood has got safer with the cops station coming in and it makes people more comfortable buying houses, buying houses from the right guys and that is going to propel a lot of decision making. People who are sitting on the fence in terms of buying or going out and taking housing loans, buying houses, that is going to start."

"You will see a real change in inventory pickup in that segment. So, it is going to impact real estate positively but selectively. Transmission of interest rates is always something which spurs this decision again positively. So, that combination is going to be very good. We will probably wait for another two quarters but all these companies, GIC Housing , Can Fin Homes which are not as highly priced as LIC Housing or a Gruh Finance would benefit. DHFL for instance is a great buy," he said.

Read more at: https://www.moneycontrol.com/news/stocks-views/dhfl-great-buy-prakash-diwan_1353162.html?utm_source=ref_article

 

Re: Dewan Housing Q4FY15 result update

Dewan Housing Finance Ltd (DHFL) reported 14.9% YoY and 1.6% QoQ growth in PAT which stood at Rs 162.1 cr in Q4FY15. AUM growth was healthy at 27% YoY and 8% QoQ. Asset quality was broadly stable with GNPA at 0.77%. For FY15, the company reported PAT of Rs 621 cr up 17.5% YoY.

....

At CMP, the stock is trading at 1.22x and 1.08x FY16E and FY17E BVPS and 8.03x and 6.71x FY16E and FY17E EPS respectively which we believe is attractive. We have maintained our BUY rating on the stock with a target price of Rs 556 (1.4x FY17E BV) indicating an upside of 29.2% from current levels.

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