Company Description: Dewan Housing Finance’s (dewh)– one of the Leading Housing Finance Companies in India.
Autor: Aditya Anand • March 22, 2019 • Coursework • 1,052 Words (5 Pages) • 624 Views
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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