Key player of housing for all..
Dewan Housing Finance Corporation (DHFL) is the 3rd largest private sector housing finance company (HFC) in terms of AUM in India. It primarily provides housing finance to individuals, especially to the low and lower-middle-income groups in Tier II, III and IV cities. The company also offers non-housing loans such as loan against properties (LAP), SME and developer loans.
View & Valuation:
DHFL is a play on the high growth Indian housing finance industry, which is driven by rising income levels, growing urbanization and low penetration of housing finance and shortage of affordable housing. We like DHFL due to its consistent loan growth, stable NIM, strong asset quality, better capital adequacy, improving return ratios and reasonable valuations. At CMP of Rs297, the stock is trading at P/ABV of 1.7x and 1.5x for FY17E and FY18E, respectively, a steep discount to other HFCs (trading >2.5x FY18E P/ABV). We assign BUY rating on the stock with target price of Rs385 based on 2.0x FY18E P/ABV.
Research report Dewan Housing Finance Corporation
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