As compared to big brothers HDFC and LIC Housing Finance, GIC has to do a lot of catching up to do, both in terms of gaining investor fancy and growing up size. A lower discount is justified, considering the company's indifferent performance in the past and the relatively poor disclosure standards.However, given the potential for growth in the housing finance sector and the company's performance over the past two years, a narrowing of the valuation discount appears justified. And apart from this, GIC has done well for itself and discerning investors should be buying the stock, if only for the dividend yield.
Net profit of GIC Housing Finance rose by 3% to Rs 30 crore in the half year ended September 2008 as against Rs 29 crore during the corresponding half of the same period previous year.
Operating income rose 16% to Rs 150 crore in HIFY09 as against Rs 131 crore during the previous half ended September 2007.
The company disbursed Rs 363 crore of loans, registering a growth of 9%. The Company recorded a Net Interest Margin of 1.4% for the half of FY2009.
The Net NPAs of the Company stood at 2.26 % as of September 2008.
The housing sector in the Country has been growing progressively and has a vast potential for further growth.
In an environment where banks are reluctant to lend to the housing sector, housing finance companies like GIC would be able to enjoy tremendous growth opportunities in times to come.
The stock trades at a P/BV of 0.5x. It is presently quoting at around Rs.38
At the current price it also provides an extremely attractive dividend yield of more than 11%.
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