DHFL reported a strong 32.6% growth in PAT at 245 cr for 3QFY17, exceeding our
expectations. Strong momentum in loan growth, easing cost of funds with improving
NIM and lower credit cost resulted in better than expected results. 

DHFL’s performance in the first theree quarters of FY17 has
been satisfactory and we don’t see any negative developments in the near term and
we expect the company to post a healthy loan book CAGR of 21% over FY2016-18E,
which is likely to translate in earnings CAGR of 24%, over the same period. The stock
has corrected in the last few months on worry over slow down in business amid
demonetization and trades at a discount to other HFCs. At the current levels the stock is
valued at 1.3x FY2018E ABV. We maintain BUY on the stock with a target price of 350.