Due to the development regarding the cobra post expose on DHFL, we recommend a Neutral rating on the stock, given the significant uncertainties that now surround the stock. Hence, in our opinion, it will take long time for the dust to settle and for the company to regain investor confidence. Considering the above issues,

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25 January 2019 Dewan Housings (DEWH) PAT declined 37% YoY to INR3.2b (18% below estimate) in 3QFY19. Over the past quarter, the company focused on liquidity management, while growth took a backseat. It raised INR163b of borrowings, largely from portfolio sell-downs. Due to curtailed disbursements, AUM declined 3% QoQ to INR1.27t. Management reiterated its priority to reduce the builder loan portfolio share to 5% of AUM by end-FY19. Management targets to infuse INR20b of equity capital by March 2019 by means including stake sale in non-core assets. Gross Stage 3 loans increased 16bp QoQ to 1.12%. DEWH is a focused play on low-ticket housing. While the company had been gaining traction in core affordable housing loans, it opportunistically diversified into non-retail loans over the past few years. However, this is expected to normalize and DEWH is likely to focus on its core strength of being a low-ticket affordable housing financier.

Dewan Housing Finance (DHFL) posted steady operating performance yet again in 2QFY18, however, liquidity issues began at the end of the quarter. DHFLs business grew in the quarter with a 35% yoy rise in loan book to `1,10,100cr. Further, in-line with the loan book, AUMs also increased by 38% yoy in the quarter. At the bottom-line, the co..

Operating Income increased by 12.41% to Rs. 3149.67 Cr in Q1FY19 when compared to the previous quarter. Dewan Housing Finance Corporation Ltd Q1FY19 results Comment

Background: Dewan Housing Finance Corporation (DHFL) promoted by the Wadhwan group, commenced operations in 1984. DHFL with a total AUM of INR 1,209bn is the 3rd largest housing finance company with a market share of nearly~ 4% and operates through a network spread across in 352 locations. It is the only Housing Finance Company with focus on LMI customer segment. Distribution footprint is primarily spread across Tier II / III cities and outside the municipal limits of the Metros with...

Background: Dewan Housing Finance Corporation (DHFL) promoted by the Wadhwan group, commenced operations in 1984. DHFL with a total AUM of INR 1,111bn is the 3rd largest housing finance company with a market share of nearly~ 4% and operates through a network spread across in 349 locations. It is the only Housing Finance Company with focus on LMI customer segment. Distribution footprint is primarily spread across Tier II / III cities and outside the municipal limits of the Metros with...

During 4QFY18, the company's AUM grew by 23%, 57%, 42% and 61% in home loans, LAP, corporate loan and SME loans, respectively. Aggressive growth is witnessed in LAP as the interest rate is higher than that of home loans. This increasing concentration on LAP helps the NIM to be at 3% even with competitive rise in total loans and other assets. We expect the company to post a healthy loan book CAGR of 28.5% over FY2017-20E, which is likely to translate in earnings CAGR of 28%, over the same period. At the current level, the stock is valued at 1.8x FY2020E ABV. 2. Gujarat Ambuja Proteins Exports Ltd CMP Rs. 232 View HOLD Gujarat Ambuja Exports (GAEL) incorporated in August 1991 and is promoted by Mr Vijaykumar Gupta is engaged in the manufacture of refined castor oil, hydrated castor oil and hydrogenated castor oil. These products have extensive usage...

Dewan Housing Finance (DHFL) posted an impressive operating performance yet again in 4QFY18. The HFCs business grew in the quarter with a 28% yoy rise in loan book to `91,932 cr. In line with it, AUMs also increased by 33%yoy in the quarter. At the bottom line, the companys net profit grew by 26%, aided by steady growth of 25% in net in..

Background: Dewan Housing Finance Corporation (DHFL) promoted by the Wadhwan group, commenced operations in 1984. DHFL with a total AUM of INR 1,111bn is the 3rd largest housing finance company with a market share of nearly~ 4% and operates through a network spread across in 349 locations. It is the only Housing Finance Company with focus on LMI customer segment. Distribution footprint is primarily spread across Tier II / III cities and outside the municipal limits of the Metros with...

Dewan Housing Finance's (DEWH) 4QFY18 PAT (adjusted for stake sale in insurance JV in 4QFY17) grew 26% YoY to INR3.1b (2% above estimate). Disbursements in the quarter were up 81% YoY to INR158b, resulting in 33% YoY AUM growth (fastest growth in the past 18 quarters). This was driven by 23% YoY AUM growth in the core home loan segment and 52% YoY growth in the non-core segment. The share of non-core loans now stands at 39% v/s 37% in 3QFY18 and 34% in 4QFY17. Management has guided for 22% AUM growth in FY19.

Outlook and valuation: We expect the company to post a healthy loan book CAGR of 23% over FY2017-20E, which is likely to translate in earnings CAGR of 26%, over the same period. At the current level, the stock is valued at 1.7x FY2020E ABV. We maintain BUY on the stock, and retain our target price of `720. ..

We slightly change our assumption and maintain BUY with a TP of Rs 700 (2.25x Dec'19 ABV of Rs 311). DHFLs 3QFY18 net earnings was in line with expectation. Disbursement grew by 53.6% and was driven by all segments including Home Loan. NIM declined marginally due to lower yield on incremental book. PAT grew by 2.2/24.9% QoQ/YoY to Rs 3.1bn.

Dewan Housing Finance Corporation Ltd Q3FY18 results comment Operating Income rose by 0.83% to Rs. 2631.6 Cr in Q3FY18 when compared to the previous quarter.

Dewan Housing Finance's (DEWH) 3QFY18 PAT grew 25% YoY to INR3.1b.The quarter was characterized by strong AUM growth, a stable C/I ratio and a secular decline in cost of funds. AUM grew 29% YoY to INR1t , largely driven by 54% YoY disbursement growth. DEWH reported disbursements of INR108b, with the highest growth rate in the last 19 quarters. We note that sanctions grew 75% YoYto INR166b. This strong growth was largely led by the non-home portfolio. Loan mix is now more skewed toward LAP (at 18%, +20bp QoQ) and builder finance (at 15%, stable QoQ). Contribution of home loans reduced by 70bp QoQ to 63% of loan book

Background: Dewan Housing Finance Corporation (DHFL) promoted by the Wadhwan group, commenced operations in 1984. DHFL with a total AUM of INR 1013bn is the 3rd largest housing finance company with a market share of nearly~ 4% and operates through a network spread across in 351 locations. It is the only Housing Finance Company with focus on LMI customer segment. Distribution footprint is primarily spread across Tier II / III cities and outside the municipal limits of the Metros with...

Despite a ~45% run-up in the last six months, DHFL trades at 2.1x FY19E ABV, much cheaper than peers. Initiate coverage with a BUY. Our TP is Rs 685/sh (2.25x Sept-19E ABV). Dewan Housing (DHFL) is the fourth-largest housing finance company in the country, with an AUM of Rs 941bn as on 2QFY18. It provides home loans mainly in the peripheries of metros and Tier II/Tier III cities, targetting both the salaried and self-employed sections. Low up-country mortgage penetration, governments impetus for Housing for All and incentives for affordable housing bode well for the company.

Re-rating to continue on the back of strong performance DHFL primarily provides housing finance to individuals, especially in the lower and lower-middle-income groups in Tier II, III and IV cities. The company also...