result update - dewan housing finance corporation ltd q4fy12

7/31/2019 Result Update - Dewan Housing Finance Corporation Ltd Q4FY12

1/5

1Generating Wealth. Satisfying Investors.

Result Update

Monnet Ispat

Q4FY12/FY12- Winner on all parameters

CMP: Rs.181

Target Price: Rs.311

Recommendation: Buy

Stock Info

BSE Group B

BSE Code 511072

NSE Symbol DEWANHOUS

Bloomberg DEWH INReuters DWHN.BO

BSE Sensex 16215.84

NSE Nifty 4907.8

Market Info

Market Capital `2114.8cr

Equity Capital ` 116.8cr

Avg. Trading Vol. (NSE Qtly) 246846

52 Wk High/ Low 279/171

Face Value 10

Shareholding Pattern (%) (31st

Mar 2012)

Promoters 35.2

Domestic Institutions 0.8

Foreign Institutions 43.7

Non Promoters Corp. 15.4

Public & Others 4.9

Govt. Holdings 0.0

Dewan Housing Finance Corporation Ltd. (DHFL), the dominant player in LMI

segment, recorded whopping business growth and profitability growth on the back

of healthy core income performance and superior asset quality for Q4FY12.

Strong earnings: Robust disbursement growth and the continued demand from the

middle order segment accelerated the earnings of the company that recorded 64%

YoY growth in NII at Rs 199crs and 59% YoY growth in PAT driving the RoEs to 19%

and RoAs close to 2%. Rigorous securitization process backed by assignment

transactions (at Par) also aided in booking strong income for the Q4. Annual return

ratios look marginally on the lower side, but Management guided RoEs in the rangeof 19-20% and RoAs of 1.9-2.5% range, at leverage of 10X for FY13 and FY14.

Sturdy business growth: Healthy home loan sanctions that rose as high as 44% YoY

to Rs 12845 crs during FY12 backed by sturdy disbursement growth of 39% YoY at

Rs 9065 crs and the 80-20 loan mix (80% housing and 20% project financing) is

auguring well for the company. Management plans to record above 25% CAGR

business growth going ahead.

Impeccable asset quality: In times of stressed asset quality, DHFL stands as a clear

winner wrt asset quality healthy book with GNPAs at 0.68% and more than

sufficient provision coverage of 118% backed by stringent collection procedures

with lower defaults makes the DHFL book stronger than the peers.

Outlook: Given the current macro headwinds impacting across financial spectrum

as well as the regulatory challenges encountered by NBFCs, we concede housing

finance companies to be less affected by the current turmoil. Moreover, the niche

market focus of DHFL with differentiated and resilient business model, shift of focus

to core business (through divestment in subsidiaries), capital sufficiency lower LTVs

backed by superior asset quality, margins enrichment and superior return ratios

makes us positive on the company and we reiterate BUY rating on the stock. Sharp

rise in delinquencies or AUM compression due to market uncertainties, spike in

costs and continued subdued non-interest income performance form the downside

risks to the stock. At current valuations, it looks cheap and we value the corebusiness at 0.66X P/ABV and arrive at a SOTP price of Rs 311.

Financials:(Rs Cr) FY11 FY12 FY13E FY14E

Net interest income 339 679 774 882

Operating Profit350 398 588 739

PAT 229 306 422 527

EPS (Rs)26 29 41 50

EPS Growth (%) 117 11 38 24

RoE (%) 22 17 19 20

P/E (x) 7.7 6.9 5.0 4.1

PABV (x)1.4 1.2 1.0 0.8

Source: Company, Arihant Research.

Result Update

Dewan Housing Finance

Corporation Ltd.

May 14, 2012


2/5

2

Sector -Banking

enerating Wealth. Satisfying Investors.

Key highlights during the year FY12:

DHFL raised Rs.304 crs via the first sizeable Indian QIP in FY12 by issuing 119 cr shares at the rate of Rs.255.50 per share.

DHFL entered into a home loan syndication agreement with Yes Bank for distribution of Home Loans to all YES BANK

customers.

DHFL presently has a reach of over 421 locations in India and with representative offices in Dubai and London.

The company has achieved a Housing Loan AUM that exceeds Rs. 27000 crore as on March 31st, 2012.

DHFL now holds 50% stake in Aadhar Housing Finance which has geographical spread across 15 locations as of March,2012.

The loan book of Aadhar crossed Rs 100crs in FY12 and the maximum ticket size for the company is capped at Rs 0.6mn to

maintain focus on low income segment.

The second subsidiary of DHFL namely First Blue Home finance accounts for 67.5% of total DHFL holdings. It caters to

upper-mid income customers being serviced by DHFL. The majority of its presence is in North-India where DHFL has

minimum presence providing a huge market potential to tap upon. For FY12, FBHFL recorded robust business performance

with disbursements growing at 15% and sanctions by 20% YoY.

DHFL will be merging FBHFL (First Blue Home Finance Ltd) with itself in H1FY13. The cost of acquisition/share of DHFL to the

minority shareholders of FBHFL comes to Rs 320. Although, legally FBHFL will merge with DHFL, the business will continue

to operate as a separate Strategic Business Unit (SBU) beneath the DHFL umbrella.


3/5

3

Sector -Banking

RSF-EUP-01

Q4FY12 Earnings Update

Source: Company, Arihant Research


4/5

4

Sector -Banking

RSF-EUP-01

Income Statement

Year to 31st March (Rs.Cr) FY11 FY12 FY13E FY14E

Interest Income 1304 2468 3087 4138

Interest Expenses 965 1789 2312 3256

Net Interest Income 339 679 774 882

- growth % 55 100 14 14

Other Income 183 2 149 252

Exceptional Income 35 - - -

Operating Income 522 681 923 1134

- growth % 62 30 36 23

Operating Expenses 172 282 335 396

- Staff Cost 61 89 108 136

- Other Operating Exp. 110 193 227 260

Gross Profits 350 398 588 739

- growth % 66 14 48 26

Provisions 9 - 25 26

Profit Before Taxes 341 398 563 713

Taxes 76 92 141 185

Profit After Taxes 265 306 422 527

- growth % 76 16 38 25

Adjusted PAT 229 306 422 527

- growth % 61 34 38 25

Balance sheet

As on 31st March (Rs. Cr) FY11 FY12 FY13E FY14E

LIABILITIES

Capital 104 117 117 117

Reserves & Surplus 1444 1916 2289 2753

Networth 1548 2033 2406 2870

Borrowings 14850 17113 23014 30361

- growth % 66 15 34 32

Other liabilities

& provisions 275 2412 3182 4134

TOTAL LIABILITIES 16674 21557 28602 37365

ASSETS

Advances 14111 19368 25858 33898

- growth % 61 37 34 31

Investments 871 463 497 531

Fixed assets 222 246 253 246

Other assets 1470 1480 1995 2690

TOTAL ASSETS 16674 21557 28602 37365

Ratio Analysis

FY11 FY12 FY13E FY14E

Basic Ratio (Rs.)

EPS 26.4 29.5 40.6 50.2

Book Value per share 148.9 174.0 205.9 245.6

Dividend per share 3.5 3.5 3.5 4.5

Asset Quality (%)Gross NPAs 0.7 1.0 0.9 0.9

Net NPAs 0.1 0.3 0.3 0.3

NPA Coverage 85.1 68.4 66.7 66.7

Business Performance(%)

Loan Growth 61.1 37.3 33.5 31.1

Leverage 11.0 10.7 11.3 12.5

Avg Business Growth 63.8 26.0 34.0 31.5

Operating Profit Margin 22.6 16.1 18.2 16.8

Net Profit Margin 17.1 12.4 13.0 12.0

Efficiency Indicator (%)

Cost to Income 32.9 41.5 36.3 34.9

FY11 FY12 FY13E FY14E

Spread analysis (%)

Avg Yield on Advances 11.4 14.7 13.7 13.9

Avg Cost of Borrowings 8.1 10.0 9.5 10.3

Interest Spread 3.3 4.7 4.1 3.6

Net Interest Margin 2.9 3.9 3.3 2.9

Return Ratios (%)

RoE 21.9 17.1 19.0 20.0

RoA 2.0 1.6 1.7 1.6

Valuation ratios (x)

P/E 7.7 6.9 5.0 4.1

P/BV 1.4 1.2 1.0 0.8

Dividend Yield 1.7 1.7 1.7 2.2


5/5

5

Sector -Banking

RSF-EUP-01

Arihant Research Desk

E. [email protected]

T. 022-42254827

Head Office Registered Office

3rd Floor, Krishna Bhavan,

67 Nehru Road, Vile Parle (East),

Mumbai - 400057

Tel: (91-22) 42254800Fax: (91-22) 42254880

E-5 Ratlam Kothi

Indore - 452003, (M.P.)

Tel: (91-731) 3016100

Fax: (91-731) 3016199

Stock Rating ScaleAbsolute Return

BUY >20

ACCUMULATE 12-20

HOLD 5-12REDUCE

result update - dewan housing finance corporation ltd q4fy12

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