GIC Housing Finance: Robust growth in housing loan portfolio; Buy

CD Equisearch Pvt Ltd | March 30, 2019, 8:58 a.m.


The stock currently trades at 1.3x FY19 BV (8.8x FY19e EPS of Rs 30.63) and 1.2x FY20 BV (7.1x FY20e EPS of Rs 37.90). In view of the recent crisis in the NBFC sector, we have cut our earnings estimate for current fiscal by 26.4% (EPS of Rs 30.63 vs earlier estimate of Rs 41.65). GICHFL’s puny business size and dominance in western India cannot be overlooked. Weakened asset quality (GNPA and NNPA of 4.7% and 2.5% respectively in 9MFY19 compared to 2.3%and 0.2% in FY18) demands scrutiny. Weighing odds, we recommend buying the stock with target price of Rs 349 (previous target Rs 529) based on 1.5x FY20e BV for a period of 9-12 months; earnings expected to grow at CAGR 5.2% during FY18-20 period.

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