MOSL: INDIABULLS HOUSING FINANCE (Buy)-Strong growth, stable performance overall
​Indiabulls Housing Finance: Strong growth, stable performance overall
(IHFL IN, Mkt Cap USD7.6b, CMP INR1155, TP INR1350, 17% Upside, Buy)
- Indiabulls Housing Finance's (IHFL) PAT grew 23% YoY to INR7.8b (8% below our estimate), mainly driven by lower-than-estimated income on investments. Core operating performance was robust, with strong AUM growth (+33% YoY), stable spreads and a decline in C/I ratio.
- Management alluded to strong growth witnessed in the home loan segment, especially the mass housing segment. Disbursements were up 39% YoY in home loans. Yields continue to remain under pressure (down 14bp QoQ and 94bp YoY to 11.49%). However, due to the sharp decline in cost of funds, reported spreads remained intact at 3.24%. Management continues to guide for incremental spreads in the range of 2.75-3% and book spreads of 3-3.25%. We believe the company will continue delivering at the higher end of its guided range over the foreseeable future.
- The share of home loans in the overall book inched up 100bp to 57%. Management reiterated its guidance of 66% share of home loans by FY20.
- The liability mix continued to evolve in favor of NCDs. Management plans to raise bulk of incremental funding from NCDs, taking the share of NCDs to 60% by FY20 (currently 52%).
Indiabulls Housing Finance is a housing finance company, provides home loans, loan against properties, and commercial vehicle loans primarily to salaried and self employed sectors in India. Co. offers loans against residential and commercial properties to small to mid-sized businesses, partnership firms, and private limited or closely held companies; and commercial loans, including new vehicle loans, used vehicle/refinance, top up loans, and balance transfers to various business owners. It also provides financial related advisory services and other related ancillary services; and sells insurance products.
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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