2QFY2019 Result Update | HFC
Dec 12, 2018
Dewan Housing Finance Ltd
BUY
CMP
`205
Performance Highlights
Target Price
`300
Particulars (` cr)
2QFY19
1QFY19
% chg (qoq)
2QFY18
% chg (yoy)
Investment Period
12 Months
NII
831
824
0.9
576
44.3
Pre-prov. profit
766
728
5.2
505
51.6
PAT
439
435
1.0
288
52.3
Stock Info
Source: Company, Angel Research
Sector
HFC
Dewan Housing Finance (DHFL) posted steady operating performance yet again in
Market Cap (` cr)
6,314
2QFY18, however, liquidity issues began at the end of the quarter. DHFL’s
Beta
2.3
business grew in the quarter with a 35% yoy rise in loan book to `1,10,100cr.
52 Week High / Low
690/176
Further, in-line with the loan book, AUMs also increased by 38% yoy in the
Avg. Daily Volume
18,70,500
quarter. At the bottom-line, the company’s net profit grew by 52%, aided by steady
Face Value (`)
10
growth of 44% in net interest income, surge in other income and a reduction in
BSE Sensex
35,673
Nifty
10,694
cost with respect to income, which decreased by 80bps to 24.3%.
Reuters Code
DWNH.NS
Asset quality intact despite higher advances; however liquidity issues to impact
Bloomberg Code
DEWH.IN
growth: During 2QFY19, the company’s AUM grew by 24%, 70%, 56% and 101%
in home loans, LAP, corporate loan and SME loans respectively. Asset quality
Shareholding Pattern (%)
remained strong (GNPA - 0.96%) despite the company’s loan growth being
aggressive. The borrowings increased by 26% yoy, while the calculated cost of
Promoters
39.2
funds increased by 26bps to 9.07%. The mix in borrowing remained largely
MF / Banks / Indian Fls
9.5
unchanged with banks accounting for 42% of total borrowings, followed by capital
FII / NRIs / OCBs
20.5
markets (40%) and others (18%).
Indian Public / Others
16.3
Current liquidity issue has led the company to recalibrate business strategy. Here
on, management will focus more on retail lending and reduce project finance
from current 17% to 5% in next 4 quarters. The rising cost of funds and stiff
Abs. (%)
3m 1yr
3yr
competition would restrict it to pass on cost and will lead to compression in
Sensex
3.5
8.3
39.7
spread. We expect AUM growth to moderate for next 2 quarters considering
DHFL
(68.9)
(66.6)
(8.2)
current liquidity tightness. We will continue to closely monitor developments on
funding availability and performance of LAP/project finance book.
3-year price chart
Outlook & Valuation: Current liquidity issue would completely reset midterm
800
growth path and return ratios. We expect loan book to slowdown significantly over
600
FY18-20, driven by rising cost of funds. Considering, the above parameters, we
400
have moderated our loan growth expectations for the company from 30% to 5%
200
for FY2019E. We maintain our BUY on the stock, with our target price of `300.
0
Key financials (Standalone)
Y/E March (` cr)
FY2017
FY2018E
FY2019E
FY2020E
Source: Company, Angel Research
NII
1,859
2,460
2,674
2,691
% chg
26%
32%
9%
1%
Net profit
927
1,174
1,078
1,073
% chg
27%
27%
-8%
-1%
NIM (%)
2.4
2.5
2.4
2.3
EPS (`)
30
37
34
34
P/E (x)
7
5
6
6
Jaikishan Parmar
P/ABV (x)
0.8
0.8
0.6
0.6
022 - 39357600 Ext: 6810
RoA (%)
1.2
1.2
1.0
1.0
RoE (%)
14
14
11
10
Source: Company, Angel Research; Note: CMP as of Dec 12, 2018
Please refer to important disclosures at the end of this report
1
DHFL | 2QFY2019 Result Update
Research Team Tel: 022 - 39357800
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Disclosure of Interest Statement
HDFC Bank
1. Financial interest of research analyst or Angel or his Associate or his relative
No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives
No
3. Served as an officer, director or employee of the company covered under Research
No
4. Broking relationship with company covered under Research
No
Ratings (Based on expected returns
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
over 12 months investment period):
Reduce (-5% to -15%)
Sell (< -15)
Dec 07, 2018
5