maverick
03-12-2007, 07:03 PM
GIC Housing-Making Housing Affordable
BSE 511676; CMP Rs 68
A better way to play the growing market for Residential Real Estate would be to consider GIC Housing. The corporate has an Insitutional Ownership of nearly 71 per cent, offers a dividend yield of 4 per cent, a low PE of 6.8 on FY08 earnings, an adjusted price to book ratio of 1.2 and expected CAGR earnings growth of 24 per cent over the 2007-2009 period.
As Real Estate gets more and more Instituionalised even larger Institutional Investors will flock towards the GIC Housing stock. The current levels of GICHF accord a low cost entry for savvy investors.
GIC Housing, promoted by the premier Development Financial Institutions and the Key State owned Insurance Companies, is all set to report a CAGR profit growth of 24 per cent over the FY 2007-2009 period. At a mere 6.8 times expected earnings of Rs 10 per share for FY 08 and at 5 times FY09 estimated earnings GIC Housing is the cheapest and prime value play in the burgeoning Housing and Retail Finance sectors.
More importantly for investors, GIC Housing at a mere 1.2 times adjusted Book Value for FY08 and 0.9 times Adjusted Book Value for FY09. This makes the stock substantially cheaper than its business competitors HDFC, LIC Housing and Dewan Housing.
GICHF loan book has grown at an average 22 per cent CAGR over the 2005-07 period and will raise the tempo to 24 per cent CAGR over the next 4 years to reach a lending level of Rs 3000 crore plus.
As per HDFC the housing and real estate sector is expected to report annualised demand growth in excess of 20 per cent per annum over the next decade. As one of the leading housing finance companies with a strong focus on Tier II cities, GICHF is set to benefit from this favourable demand scenario.
GICHF scores favourably on other financial parameters as well. It carries a low low leverage of 6.7 times as against a 16 times limit set by the National Housing Bank, leaving enough room to raise larger resources over the coming years.
The ROE has remained consistently over 16 per cent and will rise to 19 per cent in FY09, making returns even more lucrative for Investors with a view over a years holding.
Some of the finest names in business apart from 50.5 per cent held by owners (IFCI-7.87 per cent, General Insurance Corpn-15.56 per cent, New India Insurance-8. 12 per cent, United India Assurance-7. 35 per cent, National Insurance-5. 89 per cent, and Oriental Insurance-5. 75 per cent), include LIC with a 5 per cent Equity stake, FII Caledonia Investments- 4.99 per cent, Tata Investments- 2.47 per cent, CD Equisearch-1. 13 per cent, Macquarie Bank-2.09 per cent, the Ruane Cunniff and Goldfarb managed Acacia Partners-3.32 per cent and other smaller institutions carry the stake to 21 per cent.
The public interest lies at 29 per cent widely dispersed. The stock also carries an approximate Dividend yield of 4 per cent, making it a better competing instrument to all those idle Bank Deposits earning piffling returns.
BSE 511676; CMP Rs 68
A better way to play the growing market for Residential Real Estate would be to consider GIC Housing. The corporate has an Insitutional Ownership of nearly 71 per cent, offers a dividend yield of 4 per cent, a low PE of 6.8 on FY08 earnings, an adjusted price to book ratio of 1.2 and expected CAGR earnings growth of 24 per cent over the 2007-2009 period.
As Real Estate gets more and more Instituionalised even larger Institutional Investors will flock towards the GIC Housing stock. The current levels of GICHF accord a low cost entry for savvy investors.
GIC Housing, promoted by the premier Development Financial Institutions and the Key State owned Insurance Companies, is all set to report a CAGR profit growth of 24 per cent over the FY 2007-2009 period. At a mere 6.8 times expected earnings of Rs 10 per share for FY 08 and at 5 times FY09 estimated earnings GIC Housing is the cheapest and prime value play in the burgeoning Housing and Retail Finance sectors.
More importantly for investors, GIC Housing at a mere 1.2 times adjusted Book Value for FY08 and 0.9 times Adjusted Book Value for FY09. This makes the stock substantially cheaper than its business competitors HDFC, LIC Housing and Dewan Housing.
GICHF loan book has grown at an average 22 per cent CAGR over the 2005-07 period and will raise the tempo to 24 per cent CAGR over the next 4 years to reach a lending level of Rs 3000 crore plus.
As per HDFC the housing and real estate sector is expected to report annualised demand growth in excess of 20 per cent per annum over the next decade. As one of the leading housing finance companies with a strong focus on Tier II cities, GICHF is set to benefit from this favourable demand scenario.
GICHF scores favourably on other financial parameters as well. It carries a low low leverage of 6.7 times as against a 16 times limit set by the National Housing Bank, leaving enough room to raise larger resources over the coming years.
The ROE has remained consistently over 16 per cent and will rise to 19 per cent in FY09, making returns even more lucrative for Investors with a view over a years holding.
Some of the finest names in business apart from 50.5 per cent held by owners (IFCI-7.87 per cent, General Insurance Corpn-15.56 per cent, New India Insurance-8. 12 per cent, United India Assurance-7. 35 per cent, National Insurance-5. 89 per cent, and Oriental Insurance-5. 75 per cent), include LIC with a 5 per cent Equity stake, FII Caledonia Investments- 4.99 per cent, Tata Investments- 2.47 per cent, CD Equisearch-1. 13 per cent, Macquarie Bank-2.09 per cent, the Ruane Cunniff and Goldfarb managed Acacia Partners-3.32 per cent and other smaller institutions carry the stake to 21 per cent.
The public interest lies at 29 per cent widely dispersed. The stock also carries an approximate Dividend yield of 4 per cent, making it a better competing instrument to all those idle Bank Deposits earning piffling returns.