MOSL: DEWAN HOUSING FINANCE (Buy)-Fuelled with capital-Upgrading estimates and target price
​Dewan Housing Finance: Fuelled with capital; Upgrading estimates and target price
(DEWH IN, Mkt Cap USD1.8b, CMP INR374, TP INR500, 34% Upside, Buy)
DEWH has received all approvals for the sale of stake in its insurance JV to a wholly-owned subsidiary. The final valuation for the 50% stake has been set at INR20b (upper end of the range provided earlier).
We upgrade our estimates as well as target price, given significant accretion to net worth without any shareholding dilution. Given the sufficient capital in place, we upgrade our AUM CAGR estimate to ~20% over FY17-19 from 18% earlier. Accretion of ~25% to net worth would drive up NIM for FY18/19 by ~10bp.
- We increase our FY18/19 PAT estimates by ~5% and BV estimates by ~25% to factor in the stake sale (higher growth and margin).
All milestones crossed – net worth accretion of ~25%
DEWH received final shareholder approval for stake sale in its life insurance JV to a wholly-owned subsidiary. Valuation for the 50% stake has been finalized at INR20b (upper end of the range provided earlier). DEWH would infuse equity capital of INR1b in its subsidiary, DIL. The subsidiary would in turn issue CCPS worth INR19b to Wadhawan Global Capital (promoter of DEWH) to help fund its purchase of the insurance stake. With the conclusion of the deal, DEWH’s net worth has increased by ~25% (we have factored in gains as a part of net worth directly).
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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