I have been watching DHFL for quite some time now. I wanted to share my views and seek your comments:
- It has some contingent liabilities on its book. From adjusted book perspective, it will give you same valuation as canfins of the world.
- What I find amusing is that management has been buying almost every week since april. They could have easily deferred their buying till the DLF-Pramericaannouncement and saved themselves some money. In this kind of macro environment, stock was going to tank onacquisitionnews.
- Insurance buy itself seems interesting. In HFC side, they have long term assets and short term liabilities. Insurance gives them long term liabilities and shorter term assets. If they can execute, it can lower lower their cost of capital and jack uptheirroa.
- I was looking at some numbers from irda. So far Pramerica has been one of the also rans. Not much scale either. Only Max has been able to execute ( i’m ignoring the PSUs). Though kapil said they won’t be infusing much in the insurance business but i don’t see them geting anywherewithoutcapital injection. Insurance bill will get passed in winter session. Then pramerica can inject more capital (upto 49%) wihtout DHFL putting up more money. Pramerica wanted to infuse capital for quitesometimebut so far dlf had resisted (and fii limit was 26% stake).
- rating upgrade will take some time.
- after sep 18, if market tanks better price will be available.
- do you have any views on short term numbers (post insurance buy) ?