Saturday, May 10, 2014

DEWAN HOUSING FINANCE CORPORATION LTD:QUIT

Hi This is regarding an HFL company, DHFL. As compared to its peers, like Gruh finance, LIC housing finance it is trading at a cheap P/E, way lesser than its P/B. Any reason as to why is it trading so low. What is your perspective?ask by comnet. 
1.Dewan housing finance corporation ltd is a 10 rupee face value finance company. 
2. Year high of Dewan housing finance corporation ltd is 256.40 and year low 101.50 stock traded at 226. 
3.Promoters of Dewan housing finance corporation ltd hold 39.25 % FII hold 30.93% DII hold 1.45%. 
4.DHFL is a dividend paying company and pays near 3 rupee dividend per year. 
5. Ok now we come to your main question "Why DHFL trading at a low P/E compare to LIC housing finance etc?" 6.Dewan housing finance corporation ltd invite a postal ballot resolution about increasing borrowing power of directors. 
It means promoter want to take high borrowings from various institutes. 
If this resolution passed then Dewan housing finance corporation ltd convert in a high debt company and due to higher interest costs company profits are down in coming years. 
7.Promoters of Dewan housing finance corporation ltd also plan to increase eqiuty shares through private placement, it will be dilute company EPS and P/E ratio is automatically higher if EPS is dilute. 
8.I think if you hold this stock and sit on profits then quit from it because heavy bulk deals also shown speculation activity on this stock. 
9. Read this Interesting story about SKS micro-finance, when it traded at 700 in 2010 one fundamental analyst on TV say it will be touch 2000 in future but i am not agree with this analyst and warn my blog readers that instead of 2000 SKS micro-finance may be trade below 200 in coming one year. 
After publishing this blog post many blog reader very angry on me and they unsubscribe my blog posts but SKS micro-finance down below 200 within one year then they realize that "Stock market is not a game of gambling,It is a game of reasoning and understanding." 
10. I have no any shares of above companies.

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