Buy Dewan Housing Finance Corporation Ltd For Target Rs.553.00 – Firstcall Research Ltd

 

Buy Dewan Housing Finance Corporation Ltd For Target Rs.553.00 - Firstcall Research Ltd

SYNOPSIS

*  Dewan Housing Finance Corporation Ltd. (DHFCL) established on the year 1984, to provide affordable housing finance to the lower and middle income groups in semi-urban and rural parts of India.

*  Net sales rose by 17.31% y-o-y at Rs. 15262.70 million in 3rd quarter of the current year 2014-15 against Rs. 13010.10 million in the corresponding quarter of the previous year.

*  Net profit Jumps to 15.36% y-o-y of Rs. 1596.58 million in Q3 FY15 against Rs. 1383.95 million in the corresponding quarter of the previous year.

*  In Q3 FY15, Profits before Interest, Depreciation and Tax was at Rs. 13834.21 million, an increase of 16.53% y-o-y against Rs. 11871.45 million in Q3 FY14.

*  During the quarter, Gross NPA stood at 0.77% and Net Interest Margin stood at 2.77%.

*  For the Q3 FY15, the Company sanctioned Housing loans, amounted to Rs. 70717.70 million, shown an increase of 19% y-o-y as against Rs. 59385.50 million for the corresponding quarter of previous year.

*  The company has securitized or assigned pool of housing and property loans aggregating to Rs. 4979.70 million during the Dec quarter of FY15.

*  Net sales registered 22.50% increase of Rs. 44027.73 mn, in the 9M FY15, as against Rs. 35940.81 mn in the 9M FY14.

*  In the nine months ended 31st Dec 2014, Net profit grew by 18.35% of Rs. 4590.06 mn compared to Rs. 3878.33 mn in the nine months ended 31st Dec 2013.

*  Net Sales and PAT of the company are expected to grow at a CAGR of 19% & 17% over 2013 to 2016E respectively.

 

QUARTERLY HIGHLIGHTS (PARENT BASIS)

Results updates- Q3 FY15,

DHFL, India’s second largest private sector housing finance company in India with a network across 570 locations and two international representative offices in Dubai, UAE and London, UK. The company has reported its financial results for the quarter ended 31st Dec, 2014.

The company has achieved a turnover of Rs. 15262.70 million for the 3rd quarter of the financial year 2014-15 as against Rs. 13010.10 million in the corresponding quarter of the previous year. Operating profit or EBITDA increased form Rs. 13834.21 million to Rs. 11871.45 million in Q3 FY15. Net profit of Rs. 1596.58 million, an increase of 15.36% in Q3 FY15 against Rs. 1383.95 million in the corresponding quarter of the previous year. The company has reported an EPS of Rs. 12.41 for the 3rd quarter as against an EPS of Rs. 10.78 in the corresponding quarter of the previous year.

 

OUTLOOK AND CONCLUSION

*  At the current market price of Rs. 481.00, the stock P/E ratio is at 9.90 x FY15E and 8.65 x FY16E respectively.

*  Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.48.58 and Rs. 55.64 respectively.

*  Net Sales and PAT of the company are expected to grow at a CAGR of 19% & 17% over 2013 to 2016E respectively.

*  On the basis of EV/EBITDA, the stock trades at 8.14 x for FY15E and 7.88 x for FY16E.

*  Price to Book Value of the stock is expected to be at 1.55 x and 1.41 x respectively for FY15E and FY16E.

*  We recommend ‘BUY’ in this particular scrip with a target price of Rs.553.00 for Medium to Long term investment.

 

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