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Amrapali Aadya
Dewan
Housing (Buy)
CMP: ₹358.85
Target: ₹398
Dewan Housing Finance Corporation Ltd (DHFL) primarily provides affordable housing finance to the lower and middle income groups in semi-urban and rural parts of India. It is recognised as a private housing finance company by the Government of India and the RBI has also considered it eligible for refinance and financial support from the National Housing Bank.
DHFL having the strong presence in affordable housing in Tier 2 and Tier 3 cities is well placed to take advantage of growing focus on infrastructure sector as well as increasing middle class income. Looking at its 100 per cent provision coverage ratio, we feel confidence in the company for the long run. Going by the analysis, we expect DHFL AUM to grow higher and keep beating industry average growth of 19 per cent. Further, going ahead improvement in margin will additionally place it out in its peer group. Though, stock is not available at cheap price but still being traded at discount to its peers.
Risks: a) Slowdown in real estate sector. b) Decline in loan growth.
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