Profit Seeker – December 2015 Pick

Dewan Housing Ltd

Content Index

• Dewan Housing Finance Limited – Investment Snapshot :- Slide #3

• Company Overview – Insight :- Slide #4

• Financials – Slide #9

Dewan Housing Ltd – Investment Snapshot (as on Jan 03, 2016)

Recommendation :- BUY

Maximum Portfolio Allocation :- 2%

Investment Phases & Buying Strategy

Time Frame:- 3 to 6 months

1st Phase (Now) of Accumulation :- 50%

Current Accumulation Range :- 230-237Rs

DHFL is our typical value stock, but a Stock which is a GoodInvestment under current Market conditions. It has a presence in aspace which offers enormous potential and is also trading atreasonable valuations which will deliver superior returns in themedium term.

Core Investment Thesis :The company is in the housing finance space and has a strongbrand which has been its strength. The company has good reachin the LMI space and is a market leader in the segment. Thecompany is also likely to benefit from increasing mortgage marketwhich makes it an attractive bet.

Current Market Price – Rs. 236.05

Book Value – 158.89

Bloomberg / Reuters Code –DEWH. IN/ DWNH.BO

BSE / NSE Code – 511072 / DHFL

Market Cap (INR CR) – 6886

P/BV – 1.49

Face Value – Rs. 10

52 Week High / Low – 569.20/198.30

Promoter’s Holding - 34.90%Other Holdings -65.10%

Company Overview

•DHFL primarily provides housing finance to individuals especially to the low and lower-middle-incomegroups in Tier-I, Tier-II, Tier-III and Tier-IV cities.

• DHFL apart from housing loans also offers non-housing loans such as loan against property and developerloans.

•DHFL has total AUM of Rs.569 Bn with Pan India presence apart from a healthy asset quality with Gross NPA of 0.84%.

•DHFL has a large distribution network of 364 company operated locations across India and about 372locations through alliances.

Differentiated Business Model

Market Leader -LMI Segment

•DHFL is the largest player in LMI segment and the second largest private sector player in the housingfinance space.

• About 80% of loan portfolio comprises housing loans given for purchase of homes, extension &improvements and self construction.

•DHFL is best placed to cater to the LMI segment’s demand due to its expertise & strong branch network inTier II & III cities.

• DHFL has been able to maintain a healthy portfolio with low delinquency rates.

Pan India Player

•DHFL has focused on under‐served areas in Tier II/III cities and peripheral areas of Tier I cities withpan‐India presence.

• DHFL is rapidly expanding its presence and has added >75 branches in H1FY15 to take network to 367branches, apart from 151 alliance centers.

•DHFL has, besides a strong network in West and South India, also tied up with banks in an endeavour towiden its reach.

• DHFL is likely to benefit immensely from government focus on affordable housing which will be mostbeneficial for the company due to its strong Tier-2 & 3 presence.

Robust Asset Liability Management

•DHFL has a robust asset-liability management which was evident as the company did not have requirementfor availing NHB emergency refinancing in the 2008 crisis.

• The borrowing profile of DHFL in FY14 was Banks & FI - 61%,NHB - 3%, Fixed Deposits -8% and Capitalmarket - 28%.

•DHFL has reduced cost of borrowings over the past few years by increasing the borrowing mix from Debtmarkets.

• DHFL target borrowing profile in 2 years is Banks & FI – 45-55%,Capital Markets – 35-40%,NHB, FII’s andother sources -20-25%.

Financials

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