by CSEC Research,
Chennai
DHFL’s loans grew
23.4%YoY to INR 468.6bn in 1QFY15, led by improvements in sanctions (+23.7%YoY)
to INR 59.1bn and disbursements (+20.3%YoY) to INR 43.4bn.
Growth in loans was
primarily led by self-employed loan segment (+45.7%YoY) and Government services
(+24.4%YoY). Subsequently, their share in the overall loans increased to 28.3%
and 17.5% respectively.
DHFL witnessed strong
growth of 78.7%YoY in LAP segment. Consequently its share in overall portfolio
improved (490bps YoY) to 16.1%. The
management indicated to sustain the LAP segment in the range of 16%-18%.
The management guided
to grow its loan book at 20%CAGR over the next three years with higher growth
in tier III and IV cities.
Valuation:
The stock is currently trading at P/BV of
0.9X, P/E of 5.8X FY16E. Given its steady loan growth, return metrics and focus
on consolidation of operations; we assign a target P/BV of 1.2X for FY16E,
implying a target price of INR 450. We rate the stock an OUTPERFORMER
Risks:
Slowdown in housing,
capital requirement in DHFL Pramerica insurance franchise and stress in project
loans
For More Details
CSEC Research
csecresearch@chola.murugappa.com
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