GIC housing has had a tough time post its q3 fy 23 results. On the face of it results are not so bad as to warrant a correction from a swing high of 248 to current levels of below 170. But that’s the state of markets we are in.
On the charts, support zone has been 165-170 and the 200 dema is at 162. 30 WEMA is at 159 and is rising. So current level is close to support and we need to watch how the above support levels hold out.
Coming specifically to results, q3 fy 22 was an exceptionally good quarter with operating profit at 100 crores and net profit at 77 crores and in the absence of strong growth that was a number difficult to match in this quarter. So we had operating profit of 87 crores in q3 fy 23 and net profit at 65 crores. But the more important thing to monitor is the asset quality wherein the improvement in GNPA and Net NPA numbers continues continuously. Net NPA has reduced from a peak of 7.82 % in June 2021 to current levels of 3.94% as on Dec 22. Gross NPA has also maintained its improvement.
Coming to q4 fy 22, it was a tepid quarter with net profit at 49 crores. So I expect q4 fy 23 to be a much better quarter on a y on y comparision when results of q4 fy 23 come out in due course.
Current Book value is at 306 and based on current run rate, EPS for fy 23 is likely to be closer to 40. So we have a financial company with price to book at 0.55, and PE at sub 5. Statistically this looks very cheap at current valuations, plus it is close to support zone.
I had earlier booked partial profits on strong run up, though only on a small portion of my total holding. At sub 170 levels, I find a lot of value here and added the earlier sold quantity today.
In these kind of situations, the valuation is of a no growth stock, available at deep discount to book value If the improvement in asset quality continues, we could see decent upsides here. ( This is not a recommendation but my thought process with relation to the company at current prices. Company does not do concalls so its difficult to dig more other than rely on numbers. I had similar experience with Canfin back in 2012-13 when it was available at deep discount to book value, though there the NPA were negligible, but significant upsides materialised once company started showing consistent growth.) PNB housing is another similar company I hold which is showing relative strength in an overall dodgy market, but there valuations are not so cheap, mainly because company is showing growth and management does concall and has clearly articulated its plan.
disc: invested and my views can be biased.
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