At the CMP of Rs. 66.7, GICHFL trades at 4.5xFY09E EPS & 1xFY09E Adjusted Book Value of Rs. 62.6. We feel that with the strong management focus & growing demand in Tier I & Tier II cities, the company would be able to maintain its earnings momentum.
GICHFL has surpassed our estimates for NII. However, it has delivered PAT below our estimations by 11.6%. We are not changing the FY09 estimations and shall relook at the same post Q1FY09 results. Rising NPAs & slower growth on a smaller base (despite enough headroom) remain concerns. However high dividend yield of 5.9% (40% dividend declared in FY08) and low P/ABV of 1.1 provide margin of safety. Investors who have exited the scrip / fresh investors could enter in the price band of Rs. 58-62 (Cum-Dividend) for 15% + returns over the next 3-4 quarters.
{We had initiated coverage on GIC Housing Finance Ltd (GICHFL) in October 2007 at Rs.53. The scrip achieved our initial target price of Rs. 75 on Decmeber 3, 2007 & made a high of Rs. 106.7 on
HDSEC,
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