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Company Description: Dewan Housing Finance’s (dewh)– one of the Leading Housing Finance Companies in India.

Autor:   •  March 22, 2019  •  Coursework  •  1,052 Words (5 Pages)  •  54 Views

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Company description: Dewan Housing Finance’s (DEWH)– One of the leading housing finance companies in India.

Home. A word that lights up a million emotions in our heart. A basic necessity of life, which many in India are deprived of. A paradigm for social and economic development. For over three decades, DHFL has been fulfilling the dreams of millions of Indians for home ownership.

Business Overview:

  • DHFL’s focus is on providing easy accessible housing finance to the lower and middle income (LMI) groups in semi-urban and rural India.
  • This company is promoted by the Wadhawan Group and was formed in 1984. It was one of the early entrants in the housing finance space in the India’s private sector.
  •  It is today the 4th largest housing finance company in India with AUM of INR 1.1tn as of March 2018 (after HDFC, LICHF and IHFL).
  • Very strong marketing and distribution network, with a presence across 348 locations throughout India as at December 31, 2017 – Distribution network focused on Tier II and Tier III cities and towns.
  • DHFL is a “AAA” rated company by domestic rating agencies i.e. CARE and Brickworks

Key Number Highlights:

1.

AUM $14.7 Bn with CAGR % 30%

7

Gross NPA 0.96%

13.

Net NPA 0.54%

2.

Avg Loan Ticket Size US$23K

8.

Capital Adequacy Ratio 19.2% against 12% mandated by NHB

14.

NIM 3%

3.

PAT $185 Mn

9.

Loan Sanctions US $3.9 Bn

15.

Cost to Income 23.2%

4.

ROA/ROE 1.7%/16.4%

10.

Mkt Cap US$ 3.1 Bn

16.

CMP: INR 649

5.

Promoter Holdings: 40%

11.

FPI& FIIs share: 23%

17.

Others Share: 37%

6.

Housing Loans as % of Loan Book 77%

12.

Revenue Growth at 20%/Profit Growth at 15%

18.

Price to Book: 2.6

Financials & Valuations (INR Crores)

Key Investment Considerations

 Y/E March         2019E         2020E         2021E

Long track record of leadership in Low cost housing refer to business overview above.

NII                 24.4         30.6         38.8

Strong Growth Opportunity supported by Government of India’s growth agenda. Can be seen by CAGR of 30% for company’s AUM.

Diversified funding mix with focus on improving it’s WACC. Improved it from 10.26% in FY15 to 8.63% in H1FY18.

Adj. PAT         452          676        744

Healthy asset quality reinforced by strong risk management framework. Gross NPAs at 0.96 vs Net NPAs at 0.3% indicating very high asset quality.

EPS (INR)         14.4         21.6         23.7

Strong financial profile & Conservative financial policies. CAR at 19%. Refer point 7 in number highlights.

Strong management team and corporate governance

BV (INR)         277         317         367

India’s mortgage to GDP ratio at 10% compared to USA and UK at 56% and 67% respectively.

RoAA (%)         1.2         1.7         1.4

Defined as: – Net Profit before provisions/average total assets

India’s housing loan market growing at CAGR of 17.9%.( $195 Bn in 2015-16. Will grow to $307 Bn in 2018-19

RoE (%)         16.4         17.4         18.6

Defined as: Net profit before provisions/average total shareholders’ funds

% of Indians living in cities 35%. Required housing units in India by 2022- 65 Mn. Government aims to construct 20 Mn units by 2022.

Payout (%)         17.1         16.8         16.8

Central Govt grant of USD$ 2000 per house under slum-rehabilitation programme. Atal Mission for Rejuvenation and Urban Transformation (AMRUT)

Valuations P/E (x) 16.8         12.1         9.9

DHFL has a Debt to Equity of 9.4X

P/BV (x)         2.3         2.0         1.7

Founders are involved in company management with CMD being Kapil Wadhwan.

P/ABV (x)         2.3         2.0         1.7

Multiple awards including Most Trusted Housing Finance Brand by CMO Asia and the World Federation of Marketing.

Div. Yield (%)         0.9         1.2         1.5

Stock Return at 43.5% in 1 year, 42.6% in 3 years and 49.2% in 5 years.

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