Gruh Finance touched its 52 week high of Rs. 540 on 13th April 2011. And we are ruing not having bought truck loads of Gruh Finance when it was languishing at Rs. 230 a year ago or better still at Rs. 105 two years ago.
Gruh Finance, in retrospect, seems such a no-brainer buy. Backed by promoters of the highest pedigree, namely, HDFC, Gruh Finance has been growing at a scorching pace. A 3 year top-line CAGR of about 25% and a 3 year profit CAGR of 32% together with a high Return on Assets of 2.73 and a Return on Equity of about 28% made Gruh Finance a compelling buy. Any sensible investor who would’ve bought Gruh Finance in those days would have reaped a rich harvest of 100% and 358% respectively at the CMP of Rs. 460.
Gruh Finance‘s peer LIC Housing Finance has also put up an incredible performance. From a quote of Rs. 60 two years ago (adjusted for stock split), LIC Housing Finance has sprinted to Rs. 225, representing a mammoth gain of 290%. LIC Housing Finance is no laggard either in the performance parameters with a 3 year CAGR in top-line of 29% and a 3 year CAGR in profits of 34%. LIC Housing Finance‘s return on assets is a healthy 2% while its Return on Equity is 23%.
However, all may not be lost after all. While Gruh Finance & LIC Housing Finance have galloped out of each (Price to Book of 6.17 and 3.06 respectively), their poorer cousin GIC Housing Finance has been languishing.
| Rs in Cr. | Mar 2010 | Mar 2009 | Mar 2008 |
| Sales Turnover | 310.86 | 312.46 | 274.52 |
| Net Profit | 67.09 | 57.14 | 56.39 |
| Total Shareholder’s Funds | 386.98 | 348.14 | 316.32 |
| Total Debt | 2,626.91 | 2,477.98 | 2,111.49 |
| Earning Per Share ( Rs) | 11.71 | 9.93 | 9.79 |
GIC Housing Finance is quoting at poorer valuations for a reason. Its performance is not as impressive as its peers. GIC Housing Finance‘s 3 year top-line CAGR was 16.41 while its 3 year profit CAGR was 10.25%. GIC Housing Finance‘s return on assets was about 2% while its Return on Equity was about 18%.
GIC Housing Finance may very well catch up with its peers Gruh Finance and LIC Housing Finance. Also GIC Housing Finance offers a lot of comfort in its valuations. At the CMP of Rs. 118, GIC Housing Finance is quoting at a Price – Book of about 1.6 which is very reasonable compared to its peers in the Industry. More importantly, GIC Housing Finance offers an attractive dividend yield of about 3.9% which offers strong protection on the downside.
| Company Name | Last Price ( Rs ) |
MCap. ( Rs in Cr.) |
P/BV (x) |
P/E (x) TTM |
Div. Yield (%) |
|---|---|---|---|---|---|
|
GIC Housing Finance Ltd |
117.95 | 617 | 1.60 | 12.2 | 3.9 |
|
Housing Development Finance Corporation Ltd |
718.00 | 1,01,238 | 5.46 | 33.2 | 1.0 |
|
LIC Housing Finance Ltd |
225.80 | 10,525 | 3.06 | 15.8 | 1.4 |
|
Dewan Housing Finance Corporation Ltd |
265.35 | 2,716 | 1.99 | 18.2 | 1.0 |
|
GRUH Finance Ltd |
467.30 | 1,639 | 6.17 | 19.8 | 1.4 |
|
Can Fin Homes Ltd |
124.80 | 240 | 0.88 | 5.9 | 1.7 |
So, from all perspectives, GIC Housing Finance is a safe and sensible bet.
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