Dewan Housing Finance Corporation LTD.

(DHFL)
25 January 2016 CMP: ` 189
Q3-FY16 Result Update Target: `322

Net Income witness growth of 24% y-o-y at Rs. 18844 million in Q3 of the financial year 2016 against Rs. 15247 million
in the corresponding quarter of the previous year due to focus on right mix of product and services across tier II & III
cities backed by efforts & implementation of processes. Housing loan contributes 81% while other 19% which is largely
consists of LAP, project loan & SME. LAP is consistently performing with 75% of the business in this segment coming
from residential property.

DHFL reported healthy AUM and Loan book growth of 25% y-o-y and 23% y-o-y to Rs 660 bn and Rs 590 bn,
respectively. Loan sanctioned and disbursement growth remained robust at 32% y-o-y and 31% y-o-y to Rs 93.1 bn and
Rs 64.3 bn, respectively. Management is confident of maintaining similar AUM growth rates going forward as well and
they have outlined a target of reaching Rs. 1 lakh crore AUM by FY18. Sanctions increased 32% y-o-y to Rs. 93080
million against. Disbursements during the quarter ended 31st Dec., 2015 amounted to Rs. 64280 million, showing the
increase of 31% y-o-y.

Operating profit was at Rs. 17060 million as against Rs. 13832 million in Q3 FY15, an increase of 23%. Net profit
registered a growth of 16% y-o-y at Rs. 1859 million in Q3 FY16 as compared to Rs. 1597 million in Q3 FY15.

NIM remained stable sequentially and stood at 2.87% as the company continued to pass on decrease in cost of funds
benefits to customers during Q3FY16. Cost of funding for the quarter stood at 9.6% as against 10.3% previous year on
account of continued focus on expanding investor base and benefit from reduction in base rate.

1 Analyst: Ridhi Mehta Anand Rathi Research

ridhimehta@rathi.com
Dewan Housing Finance Corporation LTD. (DHFL)

Q3-FY16 Result Update

In Q3FY16, asset Quality continued to remain broadly stable with Gross NPAs at 0.84% (+3 bps q-o-q) and nil Net NPAs
with PCR of 111%. DHFL has loan book with an average ticket size of around Rs 1.2mn with LTV ratio of 49% which
remains significantly lower than that of its peers.

Branches launched last year under the project Freedom has now started showing result. Business from this location
has shown impressive growth of 87% y-o-y for 9m and 50% y-o-y for Q3 FY16

With government focus on housing for all by 2020 2022, lots of projects are seen coming up for LMI and affordable
housing category, especially houses between 15 lakh to 40 lakh have attracted huge demand. We believe that DHFL will
continue to maintain its strong asset quality in the housing loan segment given its strong position in LMI segment and
benefit from lower cost of funding

We continue to remain positive on the stock and retain our buy rating with target price of Rs. 322 per share.

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Dewan Housing Finance Corporation LTD. (DHFL)
Quarterly Results

Financial Results ( `Mn.)

(In `mn ) Q3 FY16 Q3 FY15 Q2 FY16 y-o-y q-o-q

Net Sales 18843.7 15246.5 18107.2 23.6% 4.1%
Operating Expense 1783.3 1415.0 1701.0
EBITDA 17060.4 13831.5 16406.2 23.3% 4.0%
Other Income 9.6 2.7 9.0
Depreciation 68.3 83.2 67.1
EBIT 17001.6 13751.0 16348.1 23.6% 4.0%
Interest 14197.1 11335.8 13574.8 25.2% 4.6%
PBT 2804.5 2415.2 2773.3 16.1% 1.1%
Tax 945.5 818.6 969.7
PAT 1859.0 1596.6 1803.6 16.4% 3.1%

Margins

Chg bps Chg bps

(In ` mn ) Q3 FY16 Q3 FY15 Q2 FY16
y-o-y q-o-q
Operating Margin % 90.5% 90.7% 90.6% -20 -10
Net Margin % 9.9% 10.5% 10.0% -60 -10

Source: Company, Anand Rathi Research

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 Dewan Housing Finance Corporation LTD. (DHFL)
Financials:

(In ` mn) FY14 FY15 FY16E FY17E (In ` mn) FY14 FY15 FY16E FY17E
Interest Income 49656 59790 72613 88588 LIABILITIES
Interest Expense 38110 46930 57531 69979 Shareholders Funds
NII 11546 12860 15082 18608 Equity Share Capital 1284 1457 1457 1457
Non - Interest Income 354 2423 2568 2722 Reserves and Surplus 34465 44901 52258 61098
Total Income 11900 15283 17650 21331 Non Current Liabilities
Total Expense 3738 4686 5406 6595 Long-term borrowings 322955 368887 412252 460740
Pre provision profits 8162 10596 12245 14736 Deferred Tax Liabilities 12 658 789 947
Provision 811 1166 1263 1541 Other Long Term Liabilities 3329 4316 6037 8447
PBT 7351 9430 10982 13195
Current Liabilities 76581 125930 165258 219222
Tax 2061 3218 3624 4354
Total Liabilities 438625 546148 638051 751911
PAT 5290 6213 7358 8841
ASSETS
(In ` mn) Loans 386013 486947 575294 690754
FY14 FY15 FY16E FY17E
Fixed Assets 1916 1885 1276 1353
Rev Growth 22.3% 20.4% 21.4% 22.0%
Long Term Loans and Advances 498 946 1105 1128
NII Growth 24.0% 11.4% 17.3% 23.4% Other Non-Current Assets 14368 16083 18789 20076
NIIM 3.2% 2.8% 2.8% 2.8% Current Assets 35830 40288 41587 38600
PATM 10.9% 10.8% 10.1% 10.0% TOTAL-ASSETS 438625 546148 638051 751911

Source: Company, Anand Rathi Research

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Dewan Housing Finance Corporation LTD. (DHFL)
Key Risks:

Housing Demand.

Government policy.

Interest rate fluctuation.

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Dewan Housing Finance Corporation LTD. (DHFL)
Rating and Target Price history:

DHFL rating history & price chart DHFL rating details

140
Target Price Share Price
Date Rating
120 `)
(` `)
(`
100 23-Jul-15 BUY 322 241
80 28-Oct-15 BUY 322 232
60 25-Jan-15 BUY 322 189

DHFL NIFTY 50

Source: Bloomberg, Anand Rathi Research Source: Bloomberg, Anand Rathi Research

NOTE: Prices are as on 22nd Jan, 2016 close.

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Dewan Housing Finance Corporation LTD. (DHFL)
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Dewan Housing Finance Corporation LTD. (DHFL)
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8 Anand Rathi Research

Dewan Housing Finance Corporation LTD. (DHFL)
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