Analysis of Housing Finance Companies

ANALYSIS OF HOUSING FINANCE COMPANIES
A PROJECT REPORT
Submitted by
PRANAV TRIPATHI
in partial fulfilment for the award
of
PGDM (Financial Markets)

(2016-17)
IN
SUMMER INTERNSHIP
Under the Supervision of

PROF. (DR) A. M. SHERRY
National Institute of Financial Management
Internship Period
(15-May-2017 to 14-Jul-2017)

(An Institute of Ministry of Finance, Government of India)
ANALYSIS OF HOUSING FINANCE COMPANIES
A PROJECT REPORT
Submitted by
PRANAV TRIPATHI
In partial fulfilment for the award
Of
PGDM (Financial Markets)

2016-2017
in
SUMMER INTERNSHIP
Under the Guidance of
Dr. Alok Mohan Sherry

Professor & Programme Chair
PGP (Financial Markets)

Sector - 48, Pali Road
Faridabad – 121001 , Haryana
DECLARATION
I hereby declare that the project work entitled “ANALYSIS OF HOUSING
FINANCE COMPANIES” submitted to the National Institute of Financial
Management (An Institute of Ministry of Finance, Government of India), is a
record of an original work done by me under the guidance of Dr. A.M. Sherry,
Professor & Programme Chair, PGP (Financial Markets) and this project work is
submitted in the partial fulfilment of the requirements for the award of the Post
Graduate Diploma in Management (Financial Markets), 2016-17. The results
embodied in this project have not been submitted to any other University or Institute
for the award of any degree or diploma.
Signature of the Participant
Pranav Tripathi
PGDM (Financial Markets), (2016-2017)
Enrolment No._NF161719_
Date:-________________
Place: ________________
This is to certify that above statement made by the candidate is correct to the best
of my knowledge.
1. Signature of the Project Guide
Dr. A.M. Sherry

Professor & Programme Chair, PGP (Financial Markets)

I
ACKNOWLEDGEMENT
This research was partially supported by Dr. A.M. Sherry and National Institute of
Financial Management. I am thankful to my colleagues Shubham Khandelwal and
Paramjit Singh Rawat who provided expertise that greatly assisted the research,
although they may not agree with all of the interpretations provided in this paper.
I am also grateful to Mr. Varun Jhanjee for assistance in using the information
from Bloomberg, and in that line improved the manuscript significantly.
I have to express my appreciation to our respected faculty Mr. Rishi Mehra for
sharing their pearls of wisdom with us during the course of this research. I am also
immensely grateful to lecturers Mr. Abhishek Singh, and Mr. Prakash Sumani for
their assistance in understanding the basics of economics and use of spreadsheets
respectively which helped in creating this manuscript, although any errors are my
own and should not tarnish the reputations of these esteemed professionals.`
Date: ___________________
Signature
_____________________
II
Date: ____________
TO WHOM IT MAY CONCERN
This is to certify that Pranav Tripathi, s/o- Sharad Kumar Tripathi and Neera
Tripathi, successfully completed 2 months [(From 15-May-2017 to 14-July-2017]
internship at National Institute of Financial Management under the guidance of
Prof. (Dr.) Alok Mohan Sherry, Professor & Programme Chair, PGP (Financial
Markets). His internship activity includes research and financial analysis of
companies listed under housing finance sector of BSE. We wish him every success
in his career.
For, National Institute of Financial Management
----------------------------------------
Signature of Authorized Officer

Common Seal of the Organization
III
ABBREVIATIONS
CAGR : Compounded Annual Growth Rate
EPS : Earning Per Share
BSE : Bombay Stock Exchange
SENSEX : Sensitive Index
RoE : Return on Equity
RoA : Return on Assets
RoCE : Return on Capital Employed
EV : Enterprise Value
OPM : Operating Profit Margin
NPM : Net Profit Margin
FDI : Foreign Direct Investments
ECB : External Commercial Borrowings
EBITDA : Earning Before Interest, Tax, Depreciation and Amortization
EBIT : Earning Before Interest and Tax
PBT : Profit Before Tax
IV
LIST OF TABLE
Table No Name Page No

2.1 BSE Housing Finance sector stocks 3
3.1 Earning Per Share 9
3.2 Top 2 Companies with EPS CAGR >10% 10
3.3 EPS CAGR >10% 10
3.4 Operating Profit Margin (EBDIT Margin (%)) 11
3.5 Average OPM >50% 11-12
3.6 Top 5 companies Avg OPM >50% 12
3.7 Net Profit Margin 12-13
3.8 Average NPM more than 15% 13
3.9 Net Profit Margin with 3 yr gain > 75% 13-14
3.10 Average RoCE more than 13.5% 14
3.11 Average RoCE more than 13.5% and 3 yr gain > 75% 14-15
3.12 List of companies with EV CAGR more than 15% 15
3.13 EV CAGR more than 15% 15-16
4.1 Portfolio Returns 18
4.2 Benchmark Index Returns 18
V
ABSTRACT
This research paper focuses on the companies operating in housing finance sector. The
primary aim is to analyze the financial strength of companies which are directly or indirectly
associated with flagship program of Government of India – “Housing for All by 2022”. There
two concepts prevailing- first, stock market is always moves in unpredictable way and second,
government focuses on providing houses to disadvantaged section of society, it is prima facie
evident that housing sector is going to receive huge funding in coming days from both internal as
well as external sources.
Problem Statement:
Funds available with a company can be categorized as Debt and Equity raised. Funds can
be raised through FDI, ECB, issuance of bonds, IPO, FPO etc. Since, there are multiple ways by
which funds can go in and out of a company, it is highly imperative that we go for financial
analysis of companies before investing in sunshine sector like housing finance. Due to increasing
number of players in this sector, it is important that a financial analysis is made to distinguish
between companies where one can invest and companies in which not to invest.
Method of Analysis:
Financial analysis of a company means judging how well company going to execute the
future projects, that will be assigned to these players, based upon the analysis of its historical
financial aspects. It is possible that some companies are on the verge of bankruptcy or some
companies have such a strong balance sheet that these might go for acquisitions. Hence, due to
presence of variety of factors, it is important we go for historical financial analysis of companies
based on publicly available information in annual reports. Most of the data for analysis have
been taken from Balance sheet and Profit and Loss statement from annual reports. Historical data
analysis focused on last 5 years data (or less than 5 years whatever available) from annual
reports.
Research/Findings:
Due to varying degree of financial strength of companies, it is found that some
companies are good in one aspect such as RoCE and others are good in some other factor such as
Enterprise Value (EV). Hence, this research paper analyzed various factors affecting a company
and presented data in tabulated form for easy understanding of financial factors such as RoCE,
EV, NPM, OPM etc.
Conclusions:
As one proceeds through this research paper, it is found that from 13 housing finance
companies selected initially, only 6 companies are found suitable for investing in long term
perspective. Various filter criterion are used for eliminating the contestant.
VI
TABLE OF CONTENTS
CHAPTER NO. TITLE PAGE NO.
DECLARATION I
ACKNOWLEDGEMENT II
ABBREVIATIONS IV
LIST OF TABLES V
ABSTRACT VI
Chapter 1: Introduction 1
1.1 Objective 1
1.2 Historical Perspective 1
1.3 Why need of Analysis 1
1.4 Scope and Limitations 2
Chapter 2: Research Methodology 3
2.1 Data Collection 3
2.1.1 Selection of Housing Finance companies 3
2.1.2 Financial ratios 3
2.1.2.1 Profitability Ratios 3
2.1.2.2 Liquidity Ratios 4
2.1.2.3 Per Share Ratios 4
2.1.2.4 Valuation Ratios 4
2.1.3 Stock Returns 4
2.2 Methodology 5
2.3 Tools for Analysis 5
2.4 Presentation of Data 5
Chapter 3: Development of the Assessment Model 6
3.1 Selection of Financial Metrics 6
3.2 Profitability and Growth Metrics 7
3.3 Valuation Metrics 8
VII
3.4 Minimum values for selected Metrics 8
3.4.1 Earnings Per Share 9
3.4.2 Operating Profit Margin 10
3.4.3 Net Profit Margin 12
3.4.4 Return on Capital Employed 14
3.4.5 Enterprise Value 15
3.5 Model 17
Chapter 4: Validation of the Model 18
Chapter 5: Findings & Inferences 20
5.1 Findings and Inferences 20
Appendix A: FINANCIAL RATIOS OF HOUSING FINANCE COMPANIES 23
Appendix B: RETURNS: HOUSING FINANCE SECTOR OF BSE 37
VIII
1
Chapter 1: Introduction
“Housing for All by 2022” aimed for urban areas with following components/options to
States/Union Territories and cities:-
a) Slum rehabilitation of Slum Dwellers with participation of private developers using land as a
resource;
b) Promotion of affordable housing for weaker section through credit linked subsidy;
c) Affordable housing in partnership with Public & Private sectors and
d) Subsidy for beneficiary-led individual house construction or enhancement.
1.1 Objective
As per basic objective of “Housing for All by 2022” project, it is clear that there will be
participation of both public and private players in execution of this flagship program.
Housing finance is relatively new concept in India as compared to other financial
services that are widely available across country since a long year back. However,
speedy development in housing and various activities led to the growth of Indian
housing finance market. As a result, a number of players have barged into the market.
1.2 Historical Perspective

It was in the year 1970 when Housing and Urban Development Corporation (HUDCO)
was established to finance various housing and urban infrastructure activities. However,
the Housing Development Finance Corporation (HDFC) was the India's first private
sector housing finance company came into existence in 1977. Since then, the housing
finance in India has been flying high. It's expected to grow at a growth rate of 36% in
the coming years. As the commercial banks started expanding housing-related
disbursements, the market share also started growing up. In 2000, the Indian housing
finance companies accounted for 70 per cent of the disbursements, while their
collective share decreased to 36 per cent within 5 years. In 2005, banks accounted for
64 per cent of the disbursements. So, both banks and finance companies, from public
and private sectors are increasingly moving into housing finance sector.
1.3 Why need of Analysis

So, it is important to collect historical financial information about these companies and
need deep analysis to get to know about financial wellbeing of these companies before
start investing in these companies. An investor cannot invest in all companies listed on
stock exchange. He need one or two good companies with long term growth horizon to
ANALYSIS OF HOUSING FINANCE COMPANIES PRANAV TRIPATHI

2
invest. So, financial analysis is the way which can answer such queries as which
company to invest for next five-six years to get good return.
Therefore, two points are very much clear by now that-
1. Housing sector is currently a sunshine sector
2. Investor need to know which company to invest
Whole idea of preparing this project report has focused on answering above two
questions satisfactorily.
1.4 Scope and Limitations

a) The investment horizon is long term, at least one year. The model does not attempt
to predict prices in the short term.
b) The model is limited to assessment based on fundamental parameters.
c) The study is based on Indian stocks and is limited to the stocks listed on the BSE.
Stocks included in the BSE Housing Finance sector only have been taken for the
study.
d) The model developed only indicates growth potential of a business independent of
its competitors.
e) Validation of the model is carried out by using returns based on historical data of
prices which may or may not be replicated in the future.
f) The returns accrued due to dividends have been assumed to be negligible and
ignored.
g) Black Swan events and general economic factors external to the firm either the state
of the economy or the sector affect the price / value of the firm on the bourses but
the same has not been taken into account.

3
Chapter 2: Research Methodology

2.1 Data Collection
2.1.1 Selection of Housing Finance companies
Constituents of Housing Finance sector of BSE is selected for study and analysis as this
sector wise list contains only housing finance companies which is focus of this project report.
Table 2.1 BSE Housing Finance sector stocks1

Security
Code Security Name Company Name
511196 CANFINHOME CAN FIN HOMES LTD
531556 CORALFINAC CORAL INDIA FINANCE & HOUSING LTD
511072 DHFL DEWAN HOUSING FINANCE CORPORATION LTD
511676 GICHSGFIN GIC HOUSING FINANCE LTD
511288 GRUH GRUH FINANCE LTD
500010 HDFC HOUSING DEVELOPMENT FINANCE CORP.LTD
535789 IBULHSGFIN Indiabulls Housing Finance Ltd
523465 INDBNK IND BANK HOUSING LTD.
530979 INDIAHOME INDIA HOME LOAN LTD.
500253 LICHSGFIN LIC HOUSING FINANCE LTD.
535322 REPCOHOME REPCO HOME FINANCE LTD.
511533 SAHARAHOUS SAHARA HOUSINGFINA CORPORATION LTD.
534680 SRGHFL SRG HOUSING FINANCE LTD
2.1.2 Financial ratios2

Quantitative financial analysis of a business can be recognized by using universally
accepted financial ratios. Following are the major categories of ratios used:
2.1.2.1 Profitability Ratios
i. EBITDA Margin (%)
ii. EBIT Margin (%)
iii. PBT Margin (%)
iv. Net Profit Margin (%)
v. Return on Equity (%)
vi. Return on Capital Employed (%)
______________________________________________________________________________
1
http://www.bseindia.com/markets/Equity/EQReports/industrywatch.aspx?expandable=2&page=
40201003&scripname=Housing%20Finance
2
http://www.moneycontrol.com/stocks/marketinfo/marketcap/bse/finance-housing.html

4
vii. Return on Assets (%)

viii. Debt/Equity (X)
ix. Asset Turnover Ratio (%)
2.1.2.2 Liquidity Ratios

i. Current Ratio (X)
ii. Quick Ratio (X)
iii. Inventory Turnover Ratio (X)
iv. Dividend Payout Ratio (NP) (%)
v. Dividend Payout Ratio (CP) (%)
vi. Earnings Retention Ratio (%)
vii. Cash Earnings Retention Ratio (%)
2.1.2.3 Per Share Ratios

i. Basic EPS (Rs)
ii. Book Value [ExclRevalReserve]/Share (Rs.)
iii. Book Value [InclRevalReserve]/Share (Rs.)
iv. Dividend/Share(Rs.)
v. Revenue/Share (Rs.)
vi. EBDIT/Share (Rs.)
vii. EBIT/Share (Rs.)
viii. PBT/Share (Rs.)
ix. PAT/Share (Rs)
2.1.2.4 Valuation Ratios

i. Enterprise Value (Cr.)
ii. EV/Net Operating Revenue (X)
iii. EV/EBITDA (X)
iv. MarketCap/Net Operating Revenue (X)
v. Retention Ratios (%)
vi. Price/BV (X)
vii. Price/Net Operating Revenue
viii. Earnings Yield
Above list of ratios cover almost all facets which are required for financial analysis of
business and to anticipate future growth prospects. The all ratios for each constituent of housing
sector of BSE have been tabulated in Appendix A.
2.1.3 Stock Returns

5
The primary source of data for return analysis is the price performance of the stock which
will indicate the annual returns given by selected stock. The returns due to dividends have not
been taken into account as for most cases these returns are negligible in comparison to the capital
gains. The security wise price data of the BSE Housing Finance3 sector has been obtained
directly from the stock exchange i.e. the BSE and various websites. The price data is organized
year wise tabulating returns for each stock for two periods i.e. three years and one year based on
the requirement to assess historical returns for stock selection and thereafter verify and validate
the returns of the portfolio of the stocks selected. The returns of the constituent stocks of the BSE
Housing Finance sector constituents are tabulated in Appendix B.
2.2 Methodology
Basic idea behind development of a model is that it should be based on freely available
information accessible to all investors. Hence, data used in this report is not based on paid or
subscription sources. Any form of proprietary data or analysis has not been used for the same
reasons. The data so obtained is transformed into standard variables so as to enable easy
comparisons.
2.3 Tools for Analysis
Once all the required data is gathered corresponding to constituent companies of housing
finance sector of BSE, simple statistical tools such as averages, percentage growth were used as
well as powerful tools of spreadsheets for comparing, sorting, filtering to arrive at most effective
factors. The historical price performance of selected stocks was then mapped with the selected
factors to arrive at a decision on investment.
2.4 Presentation of Data
The entire data on the financial ratios and returns of the companies comprising the housing
finance sector of BSE which were studied has been collated in the numbers format and organized
as tables which have been attached as Appendices to the report.
______________________________________________________________________________
3
http://www.bseindia.com/markets/Equity/EQReports/industrywatch.aspx?expandable=2&page=
40201003&scripname=Housing%20Finance

6
Chapter 3: Development of the Assessment Model

In any sector of industry, it will take long time for a big change to come. So, investor are
suggested to keep long term horizon of investment in order to reap benefits. Housing finance
sector has just started walking on growth trajectory due to various policy measures from
government side. Hence, in long term, only those companies which are fundamentally sound will
be going to provide best returns to investors.
Metrics based on which a business can be judged are sales, revenue, expenses, taxation,
profits, dividend, debt, assets, liabilities etc. However, important question is whether investor is
getting back the money he invested with decent profits. For measuring this aspect, metrics
related to profitability, growth and value of the business needs to be examined.
3.1 Selection of Financial Metrics
The financial metrics listed in Chapter 2 were considered for forming a base for selection tool
for identifying a stock with potential growth prospects. A stock will provide higher returns only
if-
a. The business is growing at a rate faster than peers,
b. It is earning more than the opportunity cost of the capital deployed
c. The value of the company is increasing at a steady rate.
Therefore, the parameter to be selected for comparing and screening stocks depends upon
above three factors. We will follow a process of elimination to get the basic factors used for
evaluation of stocks. Any parameter that does not give a clear indication of the profitability and
growth of the firm will be eliminated.
The liquidity ratios though important in themselves does not clearly indicate either
profitability or growth of the company. They indicate efficiency in operations which lead to
profits but are not themselves independently reflecting profits. Thus, the liquidity ratios are
eliminated from further consideration.
The per share ratio of Book Value reflects the intrinsic value of a firm. However, whether this
BV is going to translate into valuation on the stock market is not known and cannot be
determined. Some firms trade at low P/ BV multiples and some at high. There is no statistic logic
to this multiple and a number of subjective considerations of the industry/ sector, management
etc come into play. As we want to keep the parameters of evaluation objective, simple and
devoid of perception even though BV gives us a clue to the company’s valuation, we will not
consider it.
Dividend distribution tells us that the business is making profits and is sharing them with the
shareholders. But dividend distribution depends on a number of factors. There are a large number
of firms who give large dividends as they are cash rich for example some of the PSUs but they
are not always the ones who give good returns. Some management choose to give dividends
before major events or for rewarding major stakeholders. Generally the dividend yield of most

7
stocks is low and dividend distribution is not exact predictor of the stock’s performance on the
bourses.
Profit per share metrics are indicators of profits but they do not convey any predictive
knowledge or meaning. For example, say the Net profit per share of Company A is Rs 10. Now
is this good or bad? Is this adequate? The profit margins give a more accurate picture and help us
to evaluate the performance of the company. The Operating Profit Margin (EBDIT Margin (%))
tells us whether the firm is making profits in course of its business i.e. whether its core activity
devoid of financing, investing and accounting practices is profitable. Similarly, Net Profit Margin
(Net Profit Margin (%)) conveys that at the end of the day how much money the business has
actually made for the shareholders. Thus, these are two very important metrics that we will
consider for evaluation of stocks, even though making profits is no guarantee that the bourses
will reward the stock with higher valuations but it seldom happens that the bourses ignore good
profitability in the long run.
Return on Equity (RoE) and Return on Assets (RoA) are valuable inputs but what is
important is that the Return on Capital Employed (RoCE), irrespective of its source - debt or
equity. RoCE is required to generate a return which not only beats the opportunity costs - the risk
free returns but provides adequate risk compensation. RoCE reflects this and is therefore, chosen
as a parameter in preference over other metrics of return.
Enterprise Value (EV) is a very fair calculation of the worth of the company. It takes into
account debt and cash reserves and is calculated as per the formula:
EV = Market Capitalization + Debt + Preferred Stock + Minority Stock - Cash and
Investments
All the factors used in the formula are easily and accurately available thus making the EV a
fair calculation of the valuation of a company especially, as it takes into account the liabilities
which will have to borne during a theoretical takeover and gives credit for the cash and
investments. It reflects what should be paid for buying the business which should be in line with
what an investor should pay for buying this stock.
Thus, to sum up the following metrics are selected for further analysis of housing finance
companies-
i. Earnings per Share & EPS Growth Rate
ii. Operating Profit Margin & 3 Year OPM Growth
iii. Net Profit Margin & 3 Year NPM Growth
iv. Return on Capital Employed
v. Enterprise Value & EV Growth Rate
3.2 Profitability and Growth Metrics

Profitability of a business can be ascertained by using Profit margin ratios such as: EBDIT
Margin (%), EBIT Margin (%), PBT Margin (%) or Net Profit Margin (%). Profit is determined
by subtracting all costs - operating cost, financing cost, taxes etc from the revenue received. Thus,
8
a 20% profit margin means a company keeps Rs 20 from every 100 rupees that it earns as revenue.
The profit margin ratios measure what percentage of sales is making up the net income. These
ratio also indirectly measures how well a company manages its expenses relative to its net sales.
Profit margin ratios can be increased by either increasing sales or reducing expenses. Reducing
expenses is much easier for a firm than expanding its sales base. So, many times firms are seen
with applying cost cutting strategies.
First step in the financial analysis is that a company should be able to generate an operating
profit i.e sale price of the product manufactured should be more than the cost of manufacture and
selling of the product. Taxes, financing activities, debt, investing activities etc are the core activity
of the business. The operating profit margin ratio is a key indicator for investors and creditors to
see how businesses are supporting their operations. A higher operating margin is more favourable
compared with a lower ratio because this shows that the company is making enough money from
its ongoing operations to pay for its variable costs as well as its fixed costs.
After all accounting procedures have been taken into account and all governmental and
regulatory requirements met, the net profit generated is what is available to the shareholders
making the net profit margin the second metric which is considered to evaluate a business. Net
income measures the amount of total revenues that exceed total expenses.
Earnings of a business are reflected by the Earnings per Share (EPS) which indicates the
quantum of profits available to the equity holders or owners and is expressed in per share terms.
Not only should the business have a positive EPS but it should be growing at a healthy rate.
A business employs capital to generate profits. This capital may be the owner’s equity or debt;
generally both. There are costs associated with capital and the minimum profit acceptable for any
business has to be the opportunity cost of the capital employed plus a risk premium. Thus Return
on Capital Employed (RoCE) indicates whether the business is creating wealth for the owner’s or
not.
3.3 Valuation Metrics
The valuation of a business may be carried out by using a number of financial metrics but the
most popular and accurate method is to find its Enterprise Value (EV). EV is calculated as:
EV= Market Cap + Debt – Cash
Enterprise Value indicates the worth of the company. In other words it's a theoretical take
over price representing the economic value of a company. EV helps in comparing capital
structures of different companies. For the stock market investors, it is used to assess the risks and
accordingly compare the returns expected. Any kind of investments whether in stocks or a
particular company as a whole would need detailed information on the fundamentals of the
company, its comparison with the peers and this can be done with the help of EV. The enterprise
multiple gives an indication of how expensive or cheap a stock is based on the past and expected
cash flows.
3.4 Minimum values for selected Metrics

9
We need to lay down minimum benchmark values against which the selected metrics will be
compared. It will reflect whether the business is growing and that it is growing at a rate faster
than its peers in the same sector / industry because comparative performance will lead investors
to place a premium on the stock. The selected financial metrics and their minimum standards to
be considered are discussed in detail in the following subsections.
3.4.1 Earnings Per Share
The EPS of the constituents of Housing Finance sector of BSE for the years 2013-16
were collated and the three year average EPS growth calculated. The EPS growth rate is a direct
reflection in the growth of the earnings of the company, assuming equity is constant, therefore a
minimum level of 10% growth in EPS is taken and the stocks sorted.
Table 3.1 Earning Per Share
1 Yr %
COMPANY 2016 2015 2014 2013 CAGR% Gain
CAN FIN HOMES LTD 59.02 41.45 36.96 26.42 30.72 97.41%
CORAL INDIA FINANCE & HOUSING LTD 6.36 10.35 6.70 15.28 -25.34 127.42%
DEWAN HOUSING FINANCE
25.69 24.72 41.23 38.47
CORPORATION LTD -12.59 77.83%
GIC HOUSING FINANCE LTD 23.12 19.12 18.12 15.79 13.55 62.72%
GRUH FINANCE LTD 6.70 5.57 9.86 8.21 -6.55 43.65%
HOUSING DEVELOPMENT FINANCE
44.43 38.13 34.89 31.84
CORP.LTD 11.75 26.00%
Indiabulls Housing Finance Ltd 59.84 54.95 47.96 40.19 14.19 48.90%
IND BANK HOUSING LTD. -11.50 -7.35 -9.24 -8.55 10.39 113.36%
INDIA HOME LOAN LTD. 0.76 0.51 0.55 0.38 25.99 93.24%
LIC HOUSING FINANCE LTD. 33.05 27.65 26.12 20.76 16.77 41.67%
REPCO HOME FINANCE LTD. 24.04 19.78 17.71 17.07 12.09 8.14%
SAHARA HOUSINGFINA CORPORATION
2.69 3.13 3.77 2.86
LTD. -2.02 40.98%
SRG HOUSING FINANCE LTD 1.65 1.43 1.48 0.98 18.97 110.69%
The firms whose EPS growth was less than 10% were filtered out. There were 9 stocks which
had an EPS CAGR of more than 10% with an average gain of 66.90%. But it is not possible to
invest in 9 stocks.
So, EPS growth was juxtaposition with a minimum three year growth of 75%. This gave us a list
of 6 stocks and all of which gave more than 20% returns in one year. The vagaries of the bourses
is such that five stocks which have given >60% returns in last 3 years have given less than the
index or negative returns. However investment can only be made in a few stocks and it is
assumed that in our portfolio, not more than 3 stocks are to be selected. Thus, based on the three
year returns if the top 2 stocks are chosen for investment, the average return that will be achieved

10
will be 95.32% which is almost five times the index returns and almost 7-8 times the risk free
bank deposit rates.
Top 2 stocks based on the criterion-
1. EPS CAGR>10%
2. 1 Year % Gain > 60%
3. 3 Year % Gain > 75%
Table 3.2 Top 2 Companies with EPS CAGR >10%
EPS 1 Yr % 3 Yr %
COMPANY 2016 2015 2014 2013 CAGR% Gain Gain
CAN FIN HOMES LTD 59.02 41.45 36.96 26.42 30.72 97.41% 185.73%
INDIA HOME LOAN LTD. 0.76 0.51 0.55 0.38 25.99 93.24% 172.31%
SRG HOUSING FINANCE LTD 1.65 1.43 1.48 0.98 18.97 110.69% 17.06%
LIC HOUSING FINANCE LTD. 33.05 27.65 26.12 20.76 16.77 41.67% 105.54%
Indiabulls Housing Finance Ltd 59.84 54.95 47.96 40.19 14.19 48.90% 70.38%
GIC HOUSING FINANCE LTD 23.12 19.12 18.12 15.79 13.55 62.72% 43.66%
REPCO HOME FINANCE LTD. 24.04 19.78 17.71 17.07 12.09 8.14% 92.88%
44.43 38.13 34.89 31.84
CORP.LTD 11.75 26.00% 120.40%
-
-7.35 -9.24 -8.55
IND BANK HOUSING LTD. 11.50 10.39 113.36% 70.15%
2.69 3.13 3.77 2.86
LTD. -2.02 40.98% 73.18%
GRUH FINANCE LTD 6.70 5.57 9.86 8.21 -6.55 43.65% 52.06%
25.69 24.72 41.23 38.47
CORPORATION LTD -12.59 77.83% -3.77%
CORAL INDIA FINANCE & HOUSING LTD 6.36 10.35 6.70 15.28 -25.34 127.42% 215.07%
Table 3.3 EPS CAGR >10%
% of
No of Total EPS Avg
stocks stocks CAGR Gain
EPS CAGR
>10% 9 69.23% 17.16 66.90%
3 yr gain > 75% 5 55.56% 19.46 53.29%
1 yr gain >60% 2 40.00% 28.36 95.32%
Top 2 stocks 2 100.00% 28.36 95.32%
3.4.2 Operating Profit Margin

The OPM of the constituents of Housing Finance sector of BSE for the years 2013-16
was collated and the three year average OPM growth and the three Year average OPM

11
calculated. The three year average OPM is a direct reflection in the profit margins and the
efficiency of the core operations of the firm. A minimum level of 20% average OPM is taken and
the stocks sorted.
Table 3.4 Operating Profit Margin (EBDIT Margin (%))
3 Yr CAGR 3 Yr Avg 1 Yr %
COMPANY 2016 2015 2014 2013 OPM OPM Gain
CAN FIN HOMES LTD 92.41 92.05 92.02 91.53 0.32 91.87 97.41%
CORAL INDIA FINANCE &
101.18 81.64 79.59 61.86
HOUSING LTD 17.82 74.36 127.42%
DEWAN HOUSING FINANCE 84.60 84.94 91.16 90.68
CORPORATION LTD -2.29 88.93 77.83%
GIC HOUSING FINANCE LTD 95.74 91.13 88.93 88.43 2.68 89.50 62.72%
GRUH FINANCE LTD 91.90 92.41 93.47 92.73 -0.30 92.87 43.65%
HOUSING DEVELOPMENT 95.57 97.18 97.34 97.04
FINANCE CORP.LTD -0.51 97.19 26.00%
Indiabulls Housing Finance Ltd 97.95 99.54 97.28 90.15 2.80 95.66 48.90%
-
103.45 1723.47 83.87
IND BANK HOUSING LTD. 70.35 -213.72 579.00 113.36%
INDIA HOME LOAN LTD. 59.98 42.51 42.73 35.91 18.65 40.38 93.24%
LIC HOUSING FINANCE LTD. 95.82 97.61 97.84 95.96 -0.05 97.14 41.67%
REPCO HOME FINANCE LTD. 88.85 89.69 89.16 92.17 -1.22 90.34 8.14%
SAHARA HOUSINGFINA 76.16 75.26 78.32 80.39
CORPORATION LTD. -1.79 77.99 40.98%
SRG HOUSING FINANCE LTD 67.48 69.25 64.89 66.17 0.66 66.77 110.69%
The firms whose average OPM was less than 50% were filtered out. There were 12 stocks
which had an average OPM of more than 50% with an average gain of 128.47%. But it is not
possible to invest in 12 stocks.
So, average OPM was juxtaposition with a minimum three year growth of 75%. This gave us
a list of 6 stocks of which 5 gave more than 60% returns in one year. The vagaries of the bourses
is such that six stocks which have given >60% returns in last 3 years have given less than the
index or negative returns. However investment can only be made in a few stocks and it is
assumed that not more than 3 stocks are chosen. Thus, based on three year returns if the top 3 are
chosen for investment, the average return that will be achieved will be 77.67% respectively
which is almost five-to-six times the index returns and almost 8-9 times the risk free bank
deposit rates.
Table 3.5 Average OPM >50%
No of % of Total 3 yr Avg Avg
stocks stocks OPM Gain
3 yr avg OPM
>50% 12 92.31% 128.47 66.56%
12
3 yr gain > 75% 6 50.00% 166.19 93.42%

1 yr gain >60% 5 83.33% 180.30 102.32%
Top 3 stocks 3 60.00% 253.45 91.16%
Top 5 companies with average OPM greater than 50% are given below.
Table 3.6 Top 5 companies Avg OPM >50%
3 Yr CAGR 3 Yr Avg 1 Yr % 3 Yr %
COMPANY 2016 2015 2014 2013 OPM OPM Gain Gain
SRG HOUSING
67.48 69.25 64.89 66.17
FINANCE LTD 0.66 66.77 110.69% 215.07%
CAN FIN HOMES LTD 92.41 92.05 92.02 91.53 0.32 91.87 97.41% 185.73%
CORAL INDIA
FINANCE & HOUSING 101.18 81.64 79.59 61.86
LTD 17.82 74.36 127.42% 172.31%
IND BANK HOUSING -
103.45 1723.47 83.87
LTD. 70.35 -213.72 579.00 113.36% 120.40%
GIC HOUSING
95.74 91.13 88.93 88.43
FINANCE LTD 2.68 89.50 62.72% 105.54%
3.4.3 Net Profit Margin

Similarly, the three year average NPM of the housing finance sector of BSE constituents was
mapped with the three year and one year returns and the results tabulated in Tables 3.6 and 3.7.
Stocks with an average NPM of less than 15% were filtered out and rest were mapped with
historical returns to arrive at selected list of stocks.
Table 3.7 Net Profit Margin
3 yr 3 Yr
NPM Avg 1 Yr %
COMPANY 2016 2015 2014 2013 CAGR NPM Gain
CAN FIN HOMES LTD 14.50 10.56 13.10 13.78 1.71 12.48 97.41%
CORAL INDIA FINANCE & HOUSING
79.11 63.82 61.98 49.20
LTD 17.15 58.33 93.24%
9.47 9.98 10.64 10.96
CORPORATION LTD -4.75 10.53 110.69%
GIC HOUSING FINANCE LTD 14.23 14.08 15.64 15.39 -2.58 15.04 41.67%
GRUH FINANCE LTD 19.09 19.22 20.92 22.42 -5.22 20.85 48.90%
22.95 21.86 22.53 22.96
CORP.LTD -0.01 22.45 62.72%
Indiabulls Housing Finance Ltd 28.38 29.40 28.94 26.77 1.97 28.37 8.14%
- - - - -
IND BANK HOUSING LTD. 3548.36 1640.71 4488.54 5227.16 -12.11 3785.47 26.00%
INDIA HOME LOAN LTD. 20.71 23.41 29.57 26.55 -7.95 26.51 113.36%
13
LIC HOUSING FINANCE LTD. 13.43 13.06 14.34 13.76 -0.81 13.72 40.98%
REPCO HOME FINANCE LTD. 17.04 17.78 20.61 19.72 -4.75 19.37 43.65%
14.73 12.60 13.24 10.18
LTD. 13.11 12.01 77.83%
SRG HOUSING FINANCE LTD 18.27 22.44 25.18 27.12 -12.34 24.91 127.42%
Table 3.8 Average NPM more than 15%

% of 3 yr
No of Total avg Avg
stocks stocks NPM Gain
3 yr avg NPM
>15 8 61.54% 26.98 65.10%
3 yr gain >
75% 4 50.00% 1.50 63.70%
1 yr gain
>60% 2 50.00% 42.42 110.33%
Top 2 stocks 2 100.00% 42.42 110.33%
8 stocks with an average NPM of more than 15% were shortlisted of which 4 gave a three
year return of more than 75%. The one year gain of 2 stocks from these 4 was more than 60%.
These 2 shortlisted stocks returned a gain of 110.33%. Further the returns being given by the
stocks selected on the basis of these parameters are similar i.e. for Top 5, 95 -105%. Thus,
mapping both OPM and NPM does not add any value to the selection model. OPM is a more
basic factor and is returning marginally better returns therefore, we discard NPM as a selection
criterion. The top 2 companies based on NPM are highlighted below.
Table 3.9 Net Profit Margin with 3 yr gain > 75%
3 yr 3 Yr
NPM Avg 1 Yr % 3 Yr %
COMPANY 2016 2015 2014 2013 CAGR NPM Gain Gain
CAN FIN HOMES LTD 14.50 10.56 13.10 13.78 1.71 12.48 97.41% 185.73%
CORAL INDIA FINANCE & 79.11 63.82 61.98 49.20
HOUSING LTD 17.15 58.33 127.42% 215.07%
DEWAN HOUSING
FINANCE CORPORATION 9.47 9.98 10.64 10.96
LTD (4.75) 10.53 77.83% -3.77%
GIC HOUSING FINANCE
14.23 14.08 15.64 15.39
LTD (2.58) 15.04 62.72% 43.66%
GRUH FINANCE LTD 19.09 19.22 20.92 22.42 (5.22) 20.85 43.65% 52.06%
HOUSING DEVELOPMENT 22.95 21.86 22.53 22.96
FINANCE CORP.LTD (0.01) 22.45 26.00% 120.40%
Indiabulls Housing Finance
28.38 29.40 28.94 26.77
Ltd 1.97 28.37 48.90% 70.38%

14
-
(3548.36) (1640.71) (4488.54) (5227.16)
IND BANK HOUSING LTD. (12.11) 3785.47 113.36% 70.15%
INDIA HOME LOAN LTD. 20.71 23.41 29.57 26.55 (7.95) 26.51 93.24% 172.31%
LIC HOUSING FINANCE
13.43 13.06 14.34 13.76
LTD. (0.81) 13.72 41.67% 105.54%
REPCO HOME FINANCE
17.04 17.78 20.61 19.72
LTD. (4.75) 19.37 8.14% 92.88%
SAHARA HOUSINGFINA 14.73 12.60 13.24 10.18
CORPORATION LTD. 13.11 12.01 40.98% 73.18%
SRG HOUSING FINANCE
18.27 22.44 25.18 27.12
LTD (12.34) 24.91 110.69% 17.06%
3.4.4 Return on Capital Employed

The RoCE is important as it indicates the return achieved on the capital deployed, both debt and
equity. The return achieved should be at least higher than the Weighted Average Cost of Capital.
Assuming the average cost of capital as 12% as the risk free rate and the Marginal Cost of
Lending Rate of banks is about 8%, a minimum acceptable RoCE for a business doing well is
taken as 13.5%. Applying a filter of 13.5% and eliminating all companies which earn less than
13.5%, we get 4 stocks.
As before, mapping these stocks with the historic three year and one year returns we get 2 and 1
stocks. The top 1 with a RoCE more than 13.5% and historic return of more than 60% per annum
give an average return of 127.42%. The RoCE of the Housing finance sector stocks of BSE for
the period 2013 - 2016 and the average RoCE along with the results of the application of
discussed filters to arrive at the list of stocks to be invested is tabulated below at Tables 3.9 &
3.10.
Table 3.10 Average RoCE more than 13.5%
% of
No of Total 3 yr avg
stocks stocks RoCE Avg Gain
3 yr avg RoCE
>13.5% 4 30.77% 16.54% 61.49%
3 yr gain > 75% 2 50.00% 167.74% 76.71%
1 yr gain >60% 1 50.00% 20.58% 127.42%
Top 1 stocks 1 50.00% 20.58% 127.42%
Table 3.11 Average RoCE more than 13.5% and 3 yr gain > 75%

15
3 yr
AVG 1 Yr % 3 Yr %
COMPANY 2016 2015 2014 2013 RoCE Gain Gain
CAN FIN HOMES LTD 12.76% 12.09% 11.08% 10.73% 11.30% 97.41% 185.73%
CORAL INDIA FINANCE 9.68% 17.22% 12.87% 31.66%
& HOUSING LTD 20.58% 127.42% 215.07%
DEWAN HOUSING
FINANCE CORPORATION 12.97% 12.86% 12.48% 12.41%
LTD 12.58% 77.83% -3.77%
GIC HOUSING FINANCE
12.26% 12.69% 12.47% 13.08%
LTD 12.75% 62.72% 43.66%
GRUH FINANCE LTD 12.09% 13.12% 13.75% 14.11% 13.66% 43.65% 52.06%
HOUSING
DEVELOPMENT 13.37% 13.65% 14.16% 13.17%
FINANCE CORP.LTD 13.66% 26.00% 120.40%
Indiabulls Housing Finance
16.78% 17.52% 19.61% 17.59%
Ltd 18.24% 48.90% 70.38%
IND BANK HOUSING - - - - -
LTD. 149.39% 100.24% 891.93% 1216.40% 736.19% 113.36% 70.15%
INDIA HOME LOAN LTD. 2.98% 2.67% 3.78% 2.70% 3.05% 93.24% 172.31%
LIC HOUSING FINANCE
11.61% 11.58% 11.83% 11.56%
LTD. 0.12 41.67% 105.54%
REPCO HOME FINANCE
12.70% 12.85% 12.78% 13.09%
LTD. 12.91% 8.14% 92.88%
SAHARA HOUSINGFINA 6.79% 8.20% 9.44% 9.47%
CORPORATION LTD. 9.04% 40.98% 73.18%
SRG HOUSING FINANCE
3.36% 3.88% 4.08% 3.89%
LTD 3.95% 110.69% 17.06%
3.4.5 Enterprise Value

EV is a comprehensive parameter which gives the value of the business in one simple figure.
The absolute value of EV though important will not have a direct impact on the stock prices vis a
vis the growth in EV as the investors and the stock market place a premium on the same. The EV
for the housing finance sector stocks of BSE has been collated for the years 2013-2016, the EV
growth calculated based on the same and this growth has been mapped with historic returns to
arrive at predictions for investment. The EV growth rate should be in line with the expected
growth in stock price as well as the profit margins therefore, a minimum CAGR of 15% is
assumed to be acceptable and filters applied.
Table 3.12 List of companies with EV CAGR more than 15%
EV 1 Yr % 3 Yr %
COMPANY 2016 2015 2014 2013 CAGR Gain Gain
CAN FIN HOMES LTD 11680.88 8546.24 5075.21 3346.80 51.69 97.41% 185.73%

16
CORAL INDIA
FINANCE & HOUSING 52.49 41.82 14.45 13.73
LTD 56.36 127.42% 215.07%
DEWAN HOUSING
FINANCE 53784.29 46608.66 35726.48 29013.63
CORPORATION LTD 22.84 77.83% -3.77%
GIC HOUSING
7405.11 6162.41 4594.67 3849.39
FINANCE LTD 24.37 62.72% 43.66%
GRUH FINANCE LTD 17292.38 16357.50 10712.64 7505.36 32.08 43.65% 52.06%
HOUSING
DEVELOPMENT 320042.76 333977.94 242725.26 230730.41
FINANCE CORP.LTD 11.52 26.00% 120.40%
Indiabulls Housing
74177.43 57308.51 32792.55 0.00
Finance Ltd 0.00 48.90% 70.38%
IND BANK HOUSING
122.20 105.89 95.76 88.55
LTD. 11.33 113.36% 70.15%
INDIA HOME LOAN
55.56 57.05 56.69 61.71
LTD. -3.44 93.24% 172.31%
LIC HOUSING FINANCE
116877.37 102305.47 80279.72 68542.01
LTD. 19.47 41.67% 105.54%
REPCO HOME
9127.09 8334.20 5331.43 0.00
FINANCE LTD. 0.00 8.14% 92.88%
SAHARA
HOUSINGFINA 110.69 133.14 154.40 143.54
CORPORATION LTD. -8.30 40.98% 73.18%
SRG HOUSING
118.35 133.22 52.45 24.54
FINANCE LTD 68.95 110.69% 17.06%
Table 3.13 EV CAGR more than 15%

% of
No of Total EV Avg
stocks stocks CAGR Gain
3 yr EV CAGR
>15% 7 53.85% 39.39 80.20%
3 yr gain >
75% 3 42.86% 42.51 88.83%
1 yr gain >60% 2 66.67% 54.03 112.41%

Top 2 stocks 2 66.67% 54.03 112.41%
There are a total of 7 stocks which have an EV growth rate of more than 15% of which 3
stocks returned a gain of more than 75% in three years which is 43% of the stocks being
evaluated. However this conversely also means that almost 57% of the stocks with an EV growth
rate of 15% or more have given less than the Index returns. The Top 3 stocks have returned

17
88.83%. We can thus conclude quite safely that EV is an accurate measure of valuation and EV
growth manifests itself in increased stock prices.
3.5 Model
The selected parameters for stock selection based on the above discussion and analysis are as
follows:
i. EPS CAGR of more than 10%
ii. Three Year Average OPM of more than 50%
iii. Enterprise Value CAGR of more than 15%
iv. Three Year Stock return of more than 75%
Applying these parameters to the housing sector of BSE and filtering stocks which do not
meet the criterion, we get a very short list of 8 stocks which are:
i. Can Fin Homes Ltd.
ii. Coral India Finance & Housing Ltd.
iii. SRG Housing Finance Ltd.
iv. IND Bank Housing Ltd.
v. GIC Housing Finance Ltd
vi. India Home Loan Ltd.

18
Chapter 4: Validation of the Model

The proof of the pudding is in the eating. So, we need to test whether this portfolio of 6
stocks makes money. Assuming one lakh was invested in each of the stocks as on 01 Jan 2017.
The total investment of Rs 6,00,000 would be worth Rs 10,59,420 as on 30th June 2017. The
annualized return works out to be 153.13%. The stock prices and returns have been calculated
and tabulated below:
Table 4.1 Portfolio Returns
Price as on 2nd Jan Price as on 30th June
COMPANY 2017 2017 Return%
CAN FIN HOMES LTD 1649.85 3224.25 95.43
CORAL INDIA FINANCE & HOUSING LTD 160.80 214.00 33.08
SRG HOUSING FINANCE LTD 72.30 192.75 166.60
IND BANK HOUSING LTD. 21.05 27.00 28.27
GIC HOUSING FINANCE LTD 269.55 567.00 110.35
INDIA HOME LOAN LTD. 85.70 107.70 25.67
Aggregate Return 76.57
Annualized Return 153.13
Table 4.2 Benchmark Index Returns

Price as on 2nd Jan Price as on 30th June
Benchmark Index 2017 2017 Return%
BSE 26595.45 30921.66 16.27
Annualized Return 32.53
The Index returns for the period are approximately 32% thus, our portfolio has given us
almost five times the index return. This is not to say that there are no other stocks or portfolios
which would give better returns than the selected stocks, however the selection of these stocks is
through a simple method. The strategy can be executed by any layman and does not require
detailed knowledge or analysis and as such it score over tips and speculation to which almost all
retail buyers fall prey.
However, even though the set of calculations above validates the logic of the arguments
developed, it does not prove the infallibility of the model. It can be argued logically that
expecting a foolproof model for selection of stocks which give high returns and is never wrong is
not justified to expect. There have been numerous attempts to find a pattern to the behavior of the
stock markets by the greatest of minds over decades. Reams and reams of paper have been
devoted to the topic and billions of bytes of data analyzed and reanalyzed. Even after all the
analysis the most complicated of methods / algorithms are not correct hundred per cent of times.
In such a case to expect this simple model to be so is really unrealistic. However the simplicity
of the model gives it a unique character and possibly works in its favor. Even if it is correct 60-

19
70% times, an investor who stays invested over the long term, it would invariably provide high
returns. This confidence stems from the fact that all the shortlisted stocks whether they have
given positive, sub-Index or negative returns are fundamentally strong, profit making, and high
growth companies. The risks of incorrect selection can be mitigated by taking the base or pool
for selection intelligently. In this case the Housing Finance sector of BSE which has been chosen
as the base automatically eliminates hundreds of small unscrupulous fly by night operators, as it
limits the field to only housing finance sector which is sunshine sector as of now.

20
Chapter 5: Findings & Inferences

The stock market in the short term is a volatile and chaotic marketplace and its true picture
emerges only after the investor takes a broad view with a long term horizon. Any individual can
in their hind sight can pick and choose all winning stocks. It is only in real-time when the
movement of individual stocks and the bourses is blurred that finding the right investment stock
is difficult. This difficulty level is compounded by the uncertainty inherent in the stock markets.
5.1 Findings and Inferences

The major findings of the analysis of the various factors in an effort to arrive at a successful
model for stock/ portfolio selection are listed below:
i. A business has multiple facets and its performance can be quantified by using a wide
variety of standard and universally accepted financial ratios.
ii. Adequate information required to analyse stocks for potential growth is available in
the open domain freely over the internet.
iii. There is a significant relationship between selected fundamental indicators which

depict the profitability and growth of the business and the stock performance. This is
borne by the fact that a portfolio selected based on fundamental factors has been able
to achieve more than 70% returns. The price of the stock over the long term is a
reflection of its fundamental strength and growth.
iv. There is a definite correlation between historical growth and future prospects of a
stock. It is seen that almost 73% of the stocks which have given historically index
beating returns have continued to do so in the future.
v. There is a significant outperformance of stocks selected using the model with the
Housing Finance sector of BSE. In the period under study, the SENSEX returned
17% while the selected portfolio of 6 stocks gave a return of almost 76%.
vi. Profitability, Growth and Valuation metrics are sufficient to analyse and predict future
stock performance.
vii. There were 9 stocks which had an EPS CAGR of more than 10% with an average
gain of 66.9%. 5 stocks gave more than 75% returns in three year and out of these 5,
only 2 gave 1 year gain more than 60%. These returns are almost five - six times the
index returns and almost 7-8 times the risk free bank deposit rates.

21
viii. There were 12 stocks which had an average OPM of more than 50% with an average
gain of 66.56%. 5 stocks gave more than 60% returns in one year and >75% returns in
three years.
ix. The stocks shortlisted using the parameters of OPM and NPM are more than 70%
same. The returns given by the stocks selected on the basis of these parameters are
also similar i.e. for Top 3, 70 -77% same. Thus, mapping both OPM and NPM does
not add any value to the selection model. OPM is a more basic factor and returning a
marginally better predictive performance is selected and NPM discarded.
x. The RoCE is important as it indicates the return achieved on the capital deployed,
both debt and equity. There are 4 stocks with a RoCE more than 15% and historic
return of more than 60% per annum give an average return of 61.49%. Though this is
higher than the Index returns it is much lower than return given by stocks selected by
other parameters thus RoCE as a defining criterion is discarded.
xi. There are some financial metrics which are more important and give a fairer idea of
price performance than others. However, there is not a single parameter which
independently can predict future returns.
xii. Enterprise Value is a very powerful metric and in a single figure conveys the strength
of the company being analysed. However, even EV is not an absolute criterion with
100% predictive capability. It is correctly predicting superior returns in
approximately 70% of the stocks.
xiii. The selected parameters for stock selection based on the above discussion and
analysis are as follows :
a. EPS CAGR of more than 10%
b. Three Year Average OPM of more than 50%
c. Enterprise Value CAGR of more than 15%
d. Three Year Stock return of more than 85%
xiv. The annualised return of stocks selected based on the developed model works out to
be 76.57%. The BSE SENSEX Index which was taken as a base for the study
returned 17% in the same period.
xv. The model selects a portfolio of stocks for investment and predicts a better than index
performance for the same. The model cannot predict the performance of individual

22
stocks 100% of the time as even stocks which clear all selected standards have given
negative returns. Approximately, 30-40% of the stocks shortlisted give less than
Index returns.

23
Appendix A
FINANCIAL RATIOS OF HOUSING FINANCE COMPANIES
Company -> CAN FIN HOMES LTD
S.No Ratio Name / Year -> 2016 2015 2014 2013 2012
Type I : Per Share Ratios
1 Basic EPS (Rs.) 59.02 41.45 36.96 26.42 21.36
Book Value [ExclRevalReserve]/Share 329.81 289.79 220.77 191.42 169.65

2 (Rs.)
Book Value [InclRevalReserve]/Share 329.81 289.79 220.77 191.42 169.65
3 (Rs.)
4 Dividend/Share(Rs.) 10.00 7.00 6.50 4.00 3.00
5 Revenue/Share (Rs.) 406.77 306.62 282.00 191.57 139.68
6 EBDIT/Share (Rs.) 375.92 282.27 259.50 175.36 129.05
7 EBIT/Share (Rs.) 374.62 280.87 258.52 174.79 128.78
8 PBT/Share (Rs.) 95.36 51.63 52.17 36.65 29.76
9 PAT/Share (Rs) 59.01 32.39 36.96 26.42 21.36
Type II : Profitability Ratios
10 EBDIT Margin (%) 92.41 92.05 92.02 91.53 92.38
11 EBIT Margin (%) 92.09 91.60 91.67 91.24 92.19
12 PBT Margin (%) 23.44 16.83 18.49 19.13 21.30
13 Net Profit Margin (%) 14.50 10.56 13.10 13.78 15.29
14 Return on Equity (%) 17.89 11.17 16.73 13.80 12.59
15 Return on Capital Employed (%) 12.76% 12.09% 11.08% 10.73% 11.88%
16 Return on Assets (%) 1.45 1.03 1.28 1.33 1.61
17 Debt/Equity (X) 9.82 9.00 10.38 7.84 5.70
18 Asset Turnover Ratio (%) 10.03 9.79 9.77 9.69 10.53
Type III : Liquidity Ratios
19 Current Ratio (X) 0.05 0.05 0.05 0.06 0.11
20 Quick Ratio (X) 0.05 0.05 0.05 0.06 0.11
21 Inventory Turnover Ratio (X) 0.00 0.00 0.00 0.00
22 Dividend Payout Ratio (NP) (%) 16.95 21.61 17.58 15.13 14.04
23 Dividend Payout Ratio (CP) (%) 16.58 20.71 17.13 14.82 13.87
24 Earnings Retention Ratio (%) 83.05 78.39 82.42 84.87 85.96
25 Cash Earnings Retention Ratio (%) 83.42 79.29 82.87 85.18 86.13
Type IV : Valuation Ratios
26 Enterprise Value (Cr.) 11680.88 8546.24 5075.21 3346.80 2196.82
27 EV/Net Operating Revenue (X) 10.79 10.47 8.78 8.53 7.68
28 EV/EBITDA (X) 11.67 11.37 9.55 9.32 8.31
29 MarketCap/Net Operating Revenue (X) 2.84 1.98 0.67 0.72 0.81
30 Retention Ratios (%) 83.04 78.38 82.41 84.86 85.95

24
31 Price/BV (X) 3.50 2.09 0.86 0.72 0.66

32 Price/Net Operating Revenue 2.84 1.98 0.67 0.72 0.81
33 Earnings Yield 0.05 0.05 0.19 0.19 0.19
Company -> CORAL INDIA FINANCE & HOUSING LTD

1 Basic EPS (Rs.) 6.36 10.35 6.70 15.28 10.04

2 (Rs.)
3 (Rs.)
5 Revenue/Share (Rs.) 7.70 15.52 10.35 29.75 40.34
6 EBDIT/Share (Rs.) 7.79 12.67 8.24 18.40 12.32
7 EBIT/Share (Rs.) 7.54 12.50 8.07 18.24 12.15
8 PBT/Share (Rs.) 7.54 12.49 8.06 18.24 12.11
9 PAT/Share (Rs) 6.09 9.91 6.41 14.64 9.61
10 EBDIT Margin (%) 101.18 81.64 79.59 61.86 30.53
11 EBIT Margin (%) 98.00 80.49 77.98 61.32 30.12
12 PBT Margin (%) 97.94 80.45 77.86 61.31 30.01
13 Net Profit Margin (%) 79.11 63.82 61.98 49.20 23.82
14 Return on Equity (%) 8.17 14.24 10.55 26.38 23.53
16 Return on Assets (%) 7.08 12.43 9.54 23.29 17.90
17 Debt/Equity (X) 0.00 0.00 0.00 0.00 0.00
19 Current Ratio (X) 2.08 3.10 7.02 6.69 3.05
20 Quick Ratio (X) 0.64 1.37 3.35 3.14 0.47
21 Inventory Turnover Ratio (X) 0.66 1.26 0.64 1.60 1.42
28 EV/EBITDA (X) 6.47 3.17 1.68 0.72 2.01

25

31 Price/BV (X) 0.74 0.71 0.46 0.51 0.62
33 Earnings Yield 0.11 0.20 0.23 0.52 0.38

Company -> CORPORATION LTD
1 Basic EPS (Rs.) 25.69 24.72 41.23 38.47 30.60

2 (Rs.)
3 (Rs.)
4 Dividend/Share(Rs.) 8.00 5.00
5 Revenue/Share (Rs.) 269.07 440.67 386.82 321.53 274.90
6 EBDIT/Share (Rs.) 227.65 374.33 352.64 291.57 243.29
7 EBIT/Share (Rs.) 226.62 372.47 351.79 290.91 242.66
8 PBT/Share (Rs.) 38.41 66.31 57.24 47.63 41.57
9 PAT/Share (Rs) 25.50 44.02 41.19 35.24 30.40
10 EBDIT Margin (%) 84.60 84.94 91.16 90.68 88.50
11 EBIT Margin (%) 84.22 84.52 90.94 90.47 88.27
12 PBT Margin (%) 14.27 15.04 14.79 14.81 15.12
13 Net Profit Margin (%) 9.47 9.98 10.64 10.96 11.06
14 Return on Equity (%) 13.90 12.89 14.79 13.95 16.01
16 Return on Assets (%) 1.08 1.15 1.20 1.26 1.16
17 Debt/Equity (X) 9.57 8.13 9.48 8.48 0.78
19 Current Ratio (X) 0.44 0.31 0.47 0.44 0.48
20 Quick Ratio (X) 0.44 0.31 0.47 0.44 0.22

26
28 EV/EBITDA (X) 8.10 8.55 7.89 7.76 1.35

31 Price/BV (X) 1.06 1.36 0.79 0.64 1.38
33 Earnings Yield 0.13 0.09 0.19 0.22 0.12
Company -> GIC HOUSING FINANCE LTD

1 Basic EPS (Rs.) 23.12 19.12 18.12 15.79 10.96

2 (Rs.)
3 (Rs.)
5 Revenue/Share (Rs.) 162.29 135.66 115.73 102.49 80.95
6 EBDIT/Share (Rs.) 155.38 123.63 102.93 90.64 72.56
7 EBIT/Share (Rs.) 146.95 122.98 102.54 90.25 72.40
8 PBT/Share (Rs.) 35.47 28.53 24.73 20.98 14.64
9 PAT/Share (Rs) 23.11 19.11 18.11 15.78 10.96
10 EBDIT Margin (%) 95.74 91.13 88.93 88.43 89.62
11 EBIT Margin (%) 90.54 90.65 88.60 88.06 89.43
12 PBT Margin (%) 21.85 21.02 21.37 20.47 18.07
13 Net Profit Margin (%) 14.23 14.08 15.64 15.39 13.53
14 Return on Equity (%) 17.01 15.59 15.97 15.43 11.87
16 Return on Assets (%) 1.55 1.53 1.76 1.78 1.37
17 Debt/Equity (X) 8.38 7.58 6.71 6.17 6.37
19 Current Ratio (X) 0.26 0.24 0.33 0.33 0.66
20 Quick Ratio (X) 0.26 0.24 0.33 0.33 0.66

27

28 EV/EBITDA (X) 8.85 9.25 8.29 7.88 8.50
31 Price/BV (X) 1.81 1.82 0.96 1.03 0.96
33 Earnings Yield 0.09 0.09 0.17 0.15 0.12
Company -> GRUH FINANCE LTD

1 Basic EPS (Rs.) 6.70 5.57 9.86 8.21 34.13

2 (Rs.)
3 (Rs.)
5 Revenue/Share (Rs.) 35.07 29.18 46.94 36.44 145.57
6 EBDIT/Share (Rs.) 32.23 26.96 43.88 33.79 134.62
7 EBIT/Share (Rs.) 32.14 26.93 43.75 33.68 133.95
8 PBT/Share (Rs.) 9.95 8.28 13.57 11.03 46.11
9 PAT/Share (Rs) 6.70 5.61 9.82 8.17 34.09
10 EBDIT Margin (%) 91.90 92.41 93.47 92.73 92.47
11 EBIT Margin (%) 91.66 92.29 93.18 92.43 92.01
12 PBT Margin (%) 28.35 28.37 28.90 30.25 31.67
13 Net Profit Margin (%) 19.09 19.22 20.92 22.42 23.41
14 Return on Equity (%) 29.16 28.64 29.14 29.71 31.21
16 Return on Assets (%) 2.12 2.21 2.44 2.60 2.77
17 Debt/Equity (X) 10.36 10.68 9.10 7.69 7.95
19 Current Ratio (X) 0.47 0.40 0.37 0.37 0.46
20 Quick Ratio (X) 0.47 0.40 0.37 0.37 0.46
21 Inventory Turnover Ratio (X) 0.00

28
28 EV/EBITDA (X) 14.75 16.69 13.55 12.44 10.81
31 Price/BV (X) 10.41 12.42 8.68 7.64 5.81
33 Earnings Yield 0.03 0.02 0.03 0.04 0.05

Company -> CORP.LTD
1 Basic EPS (Rs.) 44.43 38.13 34.89 31.84 27.97

2 (Rs.)
3 (Rs.)
5 Revenue/Share (Rs.) 195.62 174.01 154.71 136.53 117.36
6 EBDIT/Share (Rs.) 186.96 169.11 150.61 132.49 114.04
7 EBIT/Share (Rs.) 186.62 168.92 150.40 132.34 113.90
8 PBT/Share (Rs.) 63.98 54.77 47.68 42.51 38.36
9 PAT/Share (Rs) 44.90 38.04 34.86 31.35 27.91
10 EBDIT Margin (%) 95.57 97.18 97.34 97.04 97.17
11 EBIT Margin (%) 95.39 97.07 97.21 96.92 97.05
12 PBT Margin (%) 32.70 31.47 30.81 31.13 32.69
13 Net Profit Margin (%) 22.95 21.86 22.53 22.96 23.78
14 Return on Equity (%) 20.78 19.34 19.46 19.52 21.67
16 Return on Assets (%) 2.45 2.35 2.40 2.48 2.46
17 Debt/Equity (X) 4.42 4.23 4.03 4.38 5.05
19 Current Ratio (X) 0.26 0.27 0.30 0.36 0.37
20 Quick Ratio (X) 0.26 0.27 0.30 0.36 0.37

29
28 EV/EBITDA (X) 10.84 12.54 10.33 11.26 11.28
31 Price/BV (X) 5.12 6.67 4.93 5.14 5.23
33 Earnings Yield 0.04 0.03 0.04 0.04 0.04
Company -> Indiabulls Housing Finance Ltd

1 Basic EPS (Rs.) 59.84 54.95 47.96 40.19 16.06

2 (Rs.)
3 (Rs.)
5 Revenue/Share (Rs.) 196.77 181.82 162.24 151.34 50.45
6 EBDIT/Share (Rs.) 192.76 180.99 157.83 136.43 46.70
7 EBIT/Share (Rs.) 192.27 180.47 157.59 136.13 46.63
8 PBT/Share (Rs.) 74.27 69.54 59.33 52.96 22.18
9 PAT/Share (Rs) 55.85 53.47 46.96 40.51 16.06
10 EBDIT Margin (%) 97.95 99.54 97.28 90.15 92.55
11 EBIT Margin (%) 97.71 99.25 97.13 89.95 92.41
12 PBT Margin (%) 37.74 38.24 36.56 34.99 43.95
13 Net Profit Margin (%) 28.38 29.40 28.94 26.77 31.82
14 Return on Equity (%) 21.92 28.66 27.40 24.28 26.17
16 Return on Assets (%) 3.06 3.32 3.52 3.21 3.36
17 Debt/Equity (X) 4.66 6.18 5.14 4.79 6.08
19 Current Ratio (X) 0.74 0.77 0.67 0.74 0.32
20 Quick Ratio (X) 0.74 0.77 0.67 0.74 0.32

30

28 EV/EBITDA (X) 9.13 8.91 6.22 0.00 0.00
31 Price/BV (X) 2.55 2.99 1.38 0.00 0.00
33 Earnings Yield 0.09 0.10 0.20 0.00 0.00
Company -> IND BANK HOUSING LTD.

1 Basic EPS (Rs.) -11.50 -7.35 -9.24 -8.55 -12.48
Book Value [ExclRevalReserve]/Share -112.42 -100.93 -93.58 -84.33 -75.79

2 (Rs.)
Book Value [InclRevalReserve]/Share -112.42 -100.93 -93.58 -84.33 -75.79
3 (Rs.)
5 Revenue/Share (Rs.) 0.32 0.45 0.21 0.16 0.37
6 EBDIT/Share (Rs.) 0.34 7.72 0.17 -0.12 -0.15
7 EBIT/Share (Rs.) 0.32 7.71 0.17 -0.12 -0.16
8 PBT/Share (Rs.) -11.55 -7.16 -9.40 -8.73 -8.00
9 PAT/Share (Rs) -11.50 -7.35 -9.24 -8.55 -12.48
10 EBDIT Margin (%) 103.45 1723.47 83.87 -70.35 -39.98
11 EBIT Margin (%) 99.93 1721.44 80.98 -75.25 -43.80
12 PBT Margin (%) -3564.38 -1598.25 -4567.97 -5338.76 -2159.88
13 Net Profit Margin (%) -3548.36 -1640.71 -4488.54 -5227.16 -3368.37
14 Return on Equity (%) 10.22 7.28 9.87 10.13 16.46
15 Return on Capital Employed (%) -149.39 -100.24 -891.93 -1216.40 -1390.69
16 Return on Assets (%) -106.05 -70.76 -109.31 -114.86 -233.70
17 Debt/Equity (X) -1.04 -1.04 -1.01 -1.01 -1.01

31
19 Current Ratio (X) 1.88 1.77 1.10 1.02 0.97

20 Quick Ratio (X) 1.88 1.77 1.10 1.02 0.97
28 EV/EBITDA (X) 364.52 13.71 554.62 -769.59 -580.14
30 Retention Ratios (%) -0.10 -0.06 -0.06 -0.08 -0.13
31 Price/BV (X) 33.92 13.53 29.22 43.01 27.57
32 Price/Net Operating Revenue -1.05 -1.21 -1.54 -1.22 -1.22
33 Earnings Yield 0.00 0.00 0.00 0.00 0.00
Company -> INDIA HOME LOAN LTD.

1 Basic EPS (Rs.) 0.76 0.51 0.55 0.38 0.03

2 (Rs.)
3 (Rs.)
5 Revenue/Share (Rs.) 3.65 2.16 1.85 1.43 1.11
6 EBDIT/Share (Rs.) 2.19 0.92 0.79 0.51 0.36
7 EBIT/Share (Rs.) 2.13 0.79 0.76 0.49 0.35
8 PBT/Share (Rs.) 1.13 0.72 0.74 0.49 0.35
9 PAT/Share (Rs) 0.76 0.51 0.55 0.38 0.03
10 EBDIT Margin (%) 59.98 42.51 42.73 35.91 32.83
11 EBIT Margin (%) 58.20 36.55 41.02 34.22 31.41
12 PBT Margin (%) 30.96 33.28 40.04 34.22 31.41
13 Net Profit Margin (%) 20.71 23.41 29.57 26.55 2.46
14 Return on Equity (%) 4.64 3.25 3.78 2.71 0.29
15 Return on Capital Employed (%) 2.98 2.67 3.78 2.70 0.27
16 Return on Assets (%) 2.67 2.51 3.77 2.69 0.25
17 Debt/Equity (X) 0.55 0.21 0.00 0.00 0.08

32

19 Current Ratio (X) 1.03 3.36 53.29 58.30 1.08
20 Quick Ratio (X) 1.03 3.36 53.29 58.30 1.08
28 EV/EBITDA (X) 13.38 54.62 65.49 110.24 120.54
31 Price/BV (X) 22.31 3.05 3.61 4.07 4.61
33 Earnings Yield 11.01 0.01 0.01 0.01 0.00
Company -> LIC HOUSING FINANCE LTD.

1 Basic EPS (Rs.) 33.05 27.65 26.12 20.76 19.32

2 (Rs.)
3 (Rs.)
5 Revenue/Share (Rs.) 245.76 211.78 182.48 151.68 121.62
6 EBDIT/Share (Rs.) 235.49 206.72 178.54 145.56 115.52
7 EBIT/Share (Rs.) 235.29 206.53 178.39 145.40 115.37
8 PBT/Share (Rs.) 50.99 41.97 36.32 28.08 24.46
9 PAT/Share (Rs) 33.02 27.67 26.17 20.87 18.15
10 EBDIT Margin (%) 95.82 97.61 97.84 95.96 94.98
11 EBIT Margin (%) 95.74 97.52 97.75 95.86 94.86
12 PBT Margin (%) 20.74 19.81 19.90 18.51 20.11
13 Net Profit Margin (%) 13.43 13.06 14.34 13.76 14.91
14 Return on Equity (%) 18.09 17.71 17.37 16.03 16.10

33
16 Return on Assets (%) 1.27 1.23 1.37 1.29 1.42

17 Debt/Equity (X) 10.43 10.56 9.42 8.99 8.38
19 Current Ratio (X) 0.44 0.46 0.47 0.39 0.51
20 Quick Ratio (X) 0.44 0.46 0.47 0.39 0.51
28 EV/EBITDA (X) 9.83 9.80 8.90 9.33 10.43
31 Price/BV (X) 2.69 2.80 1.57 1.74 2.33
33 Earnings Yield 0.07 0.06 0.11 0.09 0.07
Company -> REPCO HOME FINANCE LTD.

1 Basic EPS (Rs.) 24.04 19.78 17.71 17.07 13.23

2 (Rs.)
3 (Rs.)
5 Revenue/Share (Rs.) 140.82 111.00 85.93 65.27 68.65
6 EBDIT/Share (Rs.) 125.12 99.57 76.62 60.16 61.49
7 EBIT/Share (Rs.) 124.45 99.10 76.23 59.92 61.14
8 PBT/Share (Rs.) 36.79 29.86 23.99 17.18 17.58
9 PAT/Share (Rs) 24.00 19.74 17.71 12.87 13.23
10 EBDIT Margin (%) 88.85 89.69 89.16 92.17 89.56
11 EBIT Margin (%) 88.38 89.27 88.71 91.79 89.06
12 PBT Margin (%) 26.12 26.89 27.91 26.32 25.60
13 Net Profit Margin (%) 17.04 17.78 20.61 19.72 19.27

34
14 Return on Equity (%) 15.71 15.15 14.85 12.61 20.26

16 Return on Assets (%) 1.93 2.02 2.32 2.10 2.15
17 Debt/Equity (X) 5.78 5.37 4.46 4.05 6.63
19 Current Ratio (X) 0.33 0.33 0.33 0.47 0.27
20 Quick Ratio (X) 0.33 0.33 0.33 0.47 0.27
28 EV/EBITDA (X) 11.66 13.42 11.19 0.00 0.00
31 Price/BV (X) 3.80 4.91 2.76 0.00 0.00
33 Earnings Yield 0.04 0.03 0.05 0.00 0.00

Company -> LTD.
1 Basic EPS (Rs.) 2.69 3.13 3.77 2.86 3.17

2 (Rs.)
3 (Rs.)
5 Revenue/Share (Rs.) 18.26 24.82 28.49 28.12 28.36
6 EBDIT/Share (Rs.) 13.91 18.68 22.32 22.60 22.79
7 EBIT/Share (Rs.) 13.82 18.56 22.13 22.37 22.57
8 PBT/Share (Rs.) 4.12 4.65 5.07 3.78 4.28
9 PAT/Share (Rs) 2.69 3.13 3.77 2.86 3.17
10 EBDIT Margin (%) 76.16 75.26 78.32 80.39 80.35
11 EBIT Margin (%) 75.68 74.80 77.66 79.56 79.58

35
12 PBT Margin (%) 22.55 18.75 17.79 13.44 15.07

13 Net Profit Margin (%) 14.73 12.60 13.24 10.18 11.16
14 Return on Equity (%) 5.61 6.92 8.24 6.82 8.09
16 Return on Assets (%) 1.30 1.34 1.50 1.09 1.38
17 Debt/Equity (X) 3.18 3.94 4.14 4.63 4.29
19 Current Ratio (X) 17.19 8.90 1.66 2.00 1.47
20 Quick Ratio (X) 17.19 8.90 1.66 2.00 1.47
28 EV/EBITDA (X) 11.37 10.18 9.88 9.07 13.32
31 Price/BV (X) 0.75 1.05 1.03 0.98 3.85
33 Earnings Yield 0.07 0.07 0.08 0.07 0.02
Company -> SRG HOUSING FINANCE LTD

1 Basic EPS (Rs.) 1.65 1.43 1.48 0.98 1.06

2 (Rs.)
3 (Rs.)
5 Revenue/Share (Rs.) 9.03 6.05 5.87 2.90 4.15
6 EBDIT/Share (Rs.) 6.10 4.19 3.81 1.92 3.11
7 EBIT/Share (Rs.) 6.02 4.12 3.74 1.84 3.00
8 PBT/Share (Rs.) 2.45 2.01 2.10 1.04 1.44
9 PAT/Share (Rs) 1.65 1.36 1.48 0.79 1.06

36
10 EBDIT Margin (%) 67.48 69.25 64.89 66.17 75.00

11 EBIT Margin (%) 66.68 68.10 63.77 63.54 72.21
12 PBT Margin (%) 27.10 33.15 35.78 35.76 34.81
13 Net Profit Margin (%) 18.27 22.44 25.18 27.12 25.52
14 Return on Equity (%) 11.38 10.43 8.72 5.08 6.57
15 Return on Capital Employed (%) 3.36 3.88 4.08 3.89 6.57
16 Return on Assets (%) 3.14 3.75 3.98 3.14 3.73
17 Debt/Equity (X) 2.52 1.69 1.13 0.59 0.71
19 Current Ratio (X) 4.82 7.03 8.78 4.89 2.22
20 Quick Ratio (X) 4.82 7.03 8.78 4.89 2.22
28 EV/EBITDA (X) 17.16 28.11 17.05 15.81 0.00
31 Price/BV (X) 4.83 7.38 2.76 1.39 0.00
33 Earnings Yield 0.02 0.01 0.03 0.04 0.00

37
Appendix B
RETURNS: HOUSING FINANCE SECTOR OF BSE
3 Year
Company YTD 1 Year 3 Year CAGR
CAN FIN HOMES LTD 39.80% 97.41% 185.73% 183.26%
CORAL INDIA FINANCE & HOUSING LTD 15.36% 127.42% 172.31% 162.74%
CORPORATION LTD 32.42% 77.83% 17.06% 10.04%
GIC HOUSING FINANCE LTD 45.03% 62.72% 105.54% 80.70%
GRUH FINANCE LTD 16.11% 43.65% 70.38% 48.37%
CORP.LTD 15.14% 26.00% 43.66% 27.73%
Indiabulls Housing Finance Ltd 25.89% 48.90% 92.88% 68.32%
IND BANK HOUSING LTD. 13.25% 113.36% 120.40% 96.40%
INDIA HOME LOAN LTD. 12.10% 93.24% 70.15% 48.18%
LIC HOUSING FINANCE LTD. 18.42% 41.67% 73.18% 50.72%
REPCO HOME FINANCE LTD. 20.92% 8.14% 52.06% 33.89%
SAHARA HOUSINGFINA CORPORATION -
LTD. 23.08% 40.98% -3.77% -2.09%
SRG HOUSING FINANCE LTD 63.28% 110.69% 215.07% 232.83%
BSE SENSEX 7.83% 14.59% 17.50% 10.31%
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ANALYSIS OF HOUSING FINANCE COMPANIES

in partial fulfilment for the award

PGDM (Financial Markets)

Under the Supervision of

National Institute of Financial Management

In partial fulfilment for the award

PGDM (Financial Markets)

Under the Guidance of

Dr. Alok Mohan Sherry

National Institute of Financial Management

I hereby declare that the project work entitled “ANALYSIS OF HOUSING

FINANCE COMPANIES” submitted to the National Institute of Financial

Management (An Institute of Ministry of Finance, Government of India), is a

Graduate Diploma in Management (Financial Markets), 2016-17. The results

for the award of any degree or diploma.

Signature of the Participant

1. Signature of the Project Guide

Dr. A.M. Sherry

National Institute of Financial Management

TO WHOM IT MAY CONCERN

Tripathi, successfully completed 2 months [(From 15-May-2017 to 14-July-2017]

internship at National Institute of Financial Management under the guidance of

Markets). His internship activity includes research and financial analysis of

For, National Institute of Financial Management

Signature of Authorized Officer

Table No Name Page No

1.2 Historical Perspective

1.3 Why need of Analysis

ANALYSIS OF HOUSING FINANCE COMPANIES PRANAV TRIPATHI

1.4 Scope and Limitations

ANALYSIS OF HOUSING FINANCE COMPANIES PRANAV TRIPATHI

Chapter 2: Research Methodology

Table 2.1 BSE Housing Finance sector stocks1

2.1.2 Financial ratios2

ANALYSIS OF HOUSING FINANCE COMPANIES PRANAV TRIPATHI

vii. Return on Assets (%)

2.1.2.2 Liquidity Ratios

2.1.2.3 Per Share Ratios

2.1.2.4 Valuation Ratios

ANALYSIS OF HOUSING FINANCE COMPANIES PRANAV TRIPATHI

ANALYSIS OF HOUSING FINANCE COMPANIES PRANAV TRIPATHI

Chapter 3: Development of the Assessment Model

ANALYSIS OF HOUSING FINANCE COMPANIES PRANAV TRIPATHI

3.2 Profitability and Growth Metrics

ANALYSIS OF HOUSING FINANCE COMPANIES PRANAV TRIPATHI

ANALYSIS OF HOUSING FINANCE COMPANIES PRANAV TRIPATHI

Table 3.3 EPS CAGR >10%

3.4.2 Operating Profit Margin

ANALYSIS OF HOUSING FINANCE COMPANIES PRANAV TRIPATHI

3 yr gain > 75% 6 50.00% 166.19 93.42%

3.4.3 Net Profit Margin

Table 3.8 Average NPM more than 15%

ANALYSIS OF HOUSING FINANCE COMPANIES PRANAV TRIPATHI

3.4.4 Return on Capital Employed

3 yr gain > 75% 2 50.00% 167.74% 76.71%

1 yr gain >60% 1 50.00% 20.58% 127.42%

Top 1 stocks 1 50.00% 20.58% 127.42%

ANALYSIS OF HOUSING FINANCE COMPANIES PRANAV TRIPATHI

3.4.5 Enterprise Value

ANALYSIS OF HOUSING FINANCE COMPANIES PRANAV TRIPATHI