Stock Review: Dewan Housing

Dewan Housing has posted very good results. When the company acquired Deutsche Home Finance, Deutsche Postbank Home Finance Company for about Rs 700 crore plus. The market hiked their apprehension that probably they may not be able to post or the integration will take time and the investment may not yield much results but, that has all proved wrong.

Looking at their FY11 consolidated performance, loan sanction grew by about 70% in FY11 while the loan disbursements grew about 68%. And going by the financials, they have posted a growth of more than 100% in topline as well as in bottom-line. The larger portion of the contribution has come from Deutsche Postbank Home Finance.

I am expecting that the company is likely to do quite well. I wouldn't be surprised to see the company posting an EPS of close to about Rs 40 in FY12. The share is available at a PE multiple of Rs 6 on current earning while the price to book it is at Rs 1.25, taking FY12 earnings into considerations.

The PE multiple of Rs 6 and price to book of Rs 1.25, it is quite cheap when compared to LIC Housing Finance and HDFC in spite of both the companies traditionally have been enjoying higher PE multiple and higher price to book.

Maybe at these levels the share looks to have very limited downside. Once it comes on the radar because of the high institutional and FII stake also seeing in the company close to 40-42% with promoter holding about 36% so, very low float of 15-16% in the market. Once it comes in the investment radar of the value investor share should quickly move to about Rs 300 which is expected to happen in the next four- six months time.