Dewan Housing Finance Corp. Ltd. (DHFL)


DHFL average loan ticket size is 12L whereas CanFin Homes 18L. Who is going to huge benefit from government’s affordable housing scheme? Based on the above news, how do we see the moat for DHFL for next 3 to 4 years?



A focused management with calculated aggression in sales, strong credit appraisal & property appraisal skills and good cash-flow management skills will do well and grow consistently for more than a decade. I think NBFCâs share of this market will remain above 30% on an average with banks lacking similar focus and strengths to completely wipe them out.

Branches 5 yr loan book CAGR 5 Yr PAT CAGR ROE ROA

LICHF 188 29% 24% 19% 1.60%

GRUH HF 120 24% 32% 34% 2.20%

DHFL 194 55% 35% 18% 1.20%

DHFL has been growing its loan book at an impressive 55% CAGR for last 5 years. The ROE and ROA are not as good as the other two. But during this growth phase it also had to raise equity many times to keep the CAR in line.

DHFL has a superior Net-Int-Margin inspite of a higher cost of fund. It has sold its products at a higher rate and has a very reassuring source of income in fee collection contributing 23% to its income. DHFL is also successful in cross-selling insurance products of other cos. They have a non-retail portfolio of close to 18% compared to less than 10% of LICHF. This might sound risky, but I have explained why it may not be. Due to the above they have better NIM of 2.81% and impressive fee income contribution of 23%.

3) They do not outsource the legal appraisal and technical appraisal (valuation of the property to be funded). LICHF and SBI do outsource this critical aspect of loan sanctioning which leads to higher risk as per me.



Trading question



Why not wire some money for quick return Say 10-15% of folio.. Not like momentum investing as that is touch to predict too much technicalities.

I am more toward quick opportunity [although now this is also risky] say Divi’s lab(A pharma company) went for a toll after lot of plants USFDA approval got rejected. This is reversible and they can file again for approval and get it in 3-4 months sometime delayed 1 year depending upon observations found during manufacturing facility audit. Anyway so something happened and Market as usual reacted a lot and you see a good entry point .. the company as such was never in your radar .. But this is a large cap company running like for more than 30 years.
So you go ahead and bet your 10-15% of folio targeting to come out after 3-4 months making quick 10-15%.
Similar example happened with Welspun India [brand name spaces for bed sheet towel] Tesco closed their retail deal after finding out incorrect material used in towel/bedsheet than claimed (claimed was Egyptian cotton) used was some thing else. Tesco was their one of the big client like 10% of revenue I guess. market again judged it to be very bad and pulled down by 30-40 % even more
One bad year or profit due to some reason I recognized which is not long term and may not repeat.
<= Risks:
1. of-course not getting USFDA approval and getting observation after audit from a manufacturing facility tells a lot negative about management Same can be said for Egyptian cotton and Welspun
2. Entry point when do you enter in such scenario sometime stock dip and then recover a bit and then dip again may be one more negative news or even without that.
3. Chance to go down further increases say USFDA rejected then may be Europe also rejects. Tesco closed their deal then may be IKEA is also susceptive now.
These are just two examples but what I am trying to convey is I have wired some money just for this and when such event occur I check upon the company and even if some of the checklist is failed I invest into them. They are large cap so some checklist items are already full-filled by default. Like less debt .. no cash crunch… okay and capable management (bad in other respect).. management is their for long term.. good business .. good moat .. good future [ remember large cap] .. some checklist which may not be fulfilled =>
Not family owned, bad management, still costly(high P/E)
This looks like Future trading but just that it is without collateral so you know how much you can loose (Less tension).  Also you can keep the investment as long as you wish although I will prefer selling it with some loss in 2-3 months max..
But why? Always drive towards simplicity. If you stick to a plan of high saving rate and safe investment than you can’t help but be rich. I don’t understand the hurry and the need to take risk.

If you have recognised many great companies why not earn fast cash by

buying and selling?

let us say one got costly you have other choices.

so buy minimum 1 lakh of the shares and keep on shuffling ?

only problem is trap

you may walk outside your line..

You don’t need to do all this. Just stick to your plan.

All learnings

  1. Simple beats complex. Only invest in large and mid cap companies.
  2. No easy money. Never ever try to get some even if it looks like risk free.
  3. Unsubscribe from all noise in the market.
  4. Fear of missing out. You don’t need lots of ideas. Don’t bother about missed opportunities.
  5. Keep long long term in mind with few ideas. Only when these ideas are exhausted look for new ones.

Action points:

Unsubscribe from most of the newsletter.

Remove all ideas from your multiple portfolios.

Don’t read into each and every company.

Only go for large cap companies.



1. Why bother to read too much and invest too much time into this when I need just a little bit more than avg market index. I don’t want to earn two times of the index. So why this much effort and risk.
Simple beats complex
2. Only invest in large cap and in rare scenario mid cap. I will never go for small cap. Effort on research increases with Market cap. I should not see for quick and easy money(multi-bagger in short time)
There is no easy money.
3. There will always be missed opportunity. I will unsubscribe from most of the newsletter and websites which I was getting or visiting very frequently. These were from the investors who I really appreciate. Still it doesn’t matter.
Keep away from noise.
4. Remove/Delete most of the companies from multiple portfolios and watch lists.
Fear of missing out.
5. Keep limited number of stocks in watch list you will always get a window to buy/accumulate with some missed quarterly result or some other reason. Only when you have exhausted these companies from the list look for outside opportunity.
I don’t need lot of ideas.

Q. What to do about valuation and huge P/E of large cap companies in India? They are already recognized.

Not to worry a lot about this just keep this P/E in back of your mind when deciding you will find some good opportunities with a missed quarterly result or some other reason.

In general people come to equity for easy and fast money so they refrain themselves from these simple and steady ideas. There are Mutual Funds who are forced to buy these due to their technical restrictions and of-course there are some other investors.
Even if these companies have high P/E you will get a window of opportunity where there is a good entry point.
Best part with these companies is downside is less.(Generally price keep constant which is okay). even with small margin of safety there is okay return. Which is what I need.

Too much diversified

Another turning point. I simply can’t go ahead and verify each new idea and think about investing into it.

Till now I was just reading about an idea and jumping right into it. I have subscribed to all great value investing emails. Looking for ideas everywhere. Doing my own small screening for each incoming idea.

This will not go anymore. I need to unsubscribe from all this noise. Just focus on very limited companies keep studying them. Better keep a limited list of companies and invest only in them when they go down.

Q. What about all the missed opportunity?

Q. How to look into them?

Q. How to go about new opportunity?

Basically I simply can’t cover all of them also I should not spent lot of time into analyzing each company. There will always be missed opportunity I have to ignore it.

Only when I feel a need to add extra companies in the portfolio I should go about researching for new options otherwise just stick to few shortlisted options and weigh among them when you need to put extra.

A huge turning point

The bucket philosophy which I had is not for me. I just need 15-20% return which I can get by risking less.

I don’t need to make bet into small companies where I need to do lot of digging. I can just weigh the management and the business and it’s future.

Great Management => Very much needed

Clean Management => Needed

Good business are with long term prospect => Very much needed

To me risks I was taking till date looks so worthless now.

Investing in small cap

Never! At least not for me. You think idea generation is tough. It is not that tough. Generally people in market want to make easy money. They also have lot of expectations with equities they invest into. So many a time large caps are ignored. Although there are Mutual Funds who are forced to buy them because of their restrictions. Still I think for me I can easily fulfill my dream return by just going with Large cap companies. If there is huge potential then you can go for Mid-cap otherwise tend to be away from these bets.

There is no way to get easy money. If it is small cap you need to do lots or research.


Simple beats complex!