DHFL : Multi Bagger in the Housing Boom !

                                  DHFL : Multi Bagger in the Housing Boom

CMP : 575-585

BSE CODE :511072

Market Cap : 18,075 Crores

       LISTED ON : NSE AND BSE

TARGET : 1200

TIME-FRAME : 12-16 Months

History of the Company :

DHFL Ltd (Dewan Housing Finance Ltd) was established by Late Shri Rajesh Kumar Wadhawan in the year 1984. He wanted every Indian to own a home and this vision of his laid to incorporation of DHFL Ltd. Over 33 years have passed since the company's inception and today DHFL stands strong as one of India's leading housing finance companies. DHFL reaches the vast-customer base through network of 348 offices spread across the country. 

As a group, product offerings also include insurance, mutual funds, education loans etc. by way of various associate and subsidiary companies.

Strong Management team has played a major role in success of the company. It is expected to strengthen in future.

Products:

• Home Loans
• SME Loans
• Mortgage Loans

Financials of the Company : 

• Profit After Tax (PAT) for the year ended on 31st March,2017 has been reported  at Rs 2896 Crore and turnover at Rs 10,821 Crore.
• As per the numbers as on 31st March,2017 the company has generated Return on Equity of approx. 23% , Return on Capital Employed of 151% and Return on Assets of 13%
• The company is a regular dividend paying company and has paid dividend for past 10 consecutive years.

Investment Rationale : Why to Invest in this Stock ??

• Shareholding of the promoters in the company is 39.23% as on 30th December,2017 which strongly indicates interest of promoters in growth of the company.
• Indian real estate industry is expected to reach 180 Billion USD by 2020. Housing segment is likely to grow at a double digit CAGR for coming decade. Affordable housing space is looking like a multi-year growth opportunity considering vast population base of 1.30 Billion and vision of present leadership which aims to provide housing for all by year 2022.
• Housing finance is asset backed lending which ensures realization in case of default by borrower and normally the default rate is lower compared to business loans
• Market Cap to Sales Ratio : 1.80 (Considering March 2017 Sales and current market cap) is very reasonable
• At current price of 580 Rs per share and EPS of 40 Rs, the stock is presently trading at a  reasonable P/E ratio of 15.
• At a forward reasonable P/E of 25 and EPS of 50, we expect the stock price to soar higher at least to 1200 and higher levels in coming time.

Disclaimer Note: The above is not a research report but information as available on public domain and it should not be treated as a research report. Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations.

Disclosure: It is safe to assume that I might have DHFL Ltd  in my portfolio and hence my point of view can be biased. Readers should perform own due diligence before investing. We do not assume any responsibility or liability resulting from the use of information , judgments and opinions for Trading or Investment purposes on the Blog.

Cupid Ltd : A Multi-Bagger Stock

                                        CUPID LTD : A Multi-Bagger Stock

CMP : 330-335

BSE CODE :530843

Market Cap : 360 Crores

       LISTED ON : NSE AND BSE

TARGET : 650/700

TIME-FRAME : 12-16 Months

History of the Company :

Cupid Ltd is head quartered in Nashik and was incorporated in 1993. The company is leading manufacturer of quality male, female condoms and Lubricants. The company has one of the largest manufacturing facilities  with in-house Research and Development Centre. The company is India's first to have been pre-qualified by WHO/UNFPA for worldwide public distribution of female condoms.  The company has capacity to produce up to 325 million pieces of male condoms, up to 20 million pieces of female condoms and 210 million sachets of Lubricant jelly annually. The company exports to over 40 countries and derives around 75% of its revenues through exports.   

Major clients of Cupid ltd include Government of India, UN , USFPA , WHO etc.

Products:

• Male Condoms
• Female Condoms
• Lubricants

Financials of the Company : 

• Profit After Tax (PAT) for the year ended on 31st March,2017 has been reported  at Rs 20.54 Crore and turnover at 83 Crore.
• As per the numbers as on 31st March,2017 the company has generated Return on Equity of approx. 47% , Return on Capital Employed of 70% and Return on Assets of 53%
• The company is a regular dividend paying company and has paid dividend for past 3 consecutive years.
• Company is debt-free

Investment Rationale : Why to Invest in this Stock ??

• Shareholding of the promoters in the company is 44.87% as on 30th December,2017 which strongly indicates interest of promoters in growth of the company.
• Operating Cashflow positive for past 3 financial years
• Company is planning 20% capacity expansion during the current year
• Female condoms which is the unique selling point of the company has very high potential for growth in India because of large population base
• Company has state of art plant located at Nashik which has the capability to shift production from male condom to female condom or vice-versa as per the demand
• Company has strong operating margins pegged at 35-40%
• Company is tapping into a growing market in Africa where there is shortage of 450 million condoms a year. Company is setting up a new manufacturing plant as a JV in south africa to capture more market share.
• At current price of 330 Rs per share and EPS of 20 Rs , the stock is presently trading at a  reasonable P/E ratio of 16.
• At a forward reasonable P/E of 25 and EPS of 25, we expect the stock price to soar higher at least to 625 and higher levels in coming time.

Disclaimer Note: The above is not a research report but information as available on public domain and it should not be treated as a research report. Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations.

Disclosure: It is safe to assume that I might have Cupid Ltd  in my portfolio and hence my point of view can be biased. Readers should perform own due diligence before investing. We do not assume any responsibility or liability resulting from the use of information , judgments and opinions for Trading or Investment purposes on the Blog.