Dewan Housing Finance Corp Research Report By Nirmal Bang

DHFL operates in the mortgage financing business where
growth and asset quality have been proven to be healthy in
the last few years. We expect their robust loan book to
continue with healthy asset quality trends.

Recent ratings upgrade by CARE, rising proportion of LAP and focus on securitization will aid margins. Driven by strong disbursement and focus on asset quality, DHFL is well-positioned to deliver sustainable and profitable growth. Healthy asset quality and prudent provisioning policy makes it better placed among its peers.

Going forward, with an improvement in operating performance, the return ratios are set to improve. At the CMP (current market price), the stock is trading at 1.1x and 0.95x FY15E and FY16E BVPS and 6.95x and 5.8x FY15E and FY16E EPS, respectively, which is attractive and at significant discount to its peers.

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