DHFL positive after Q3 earnings, outlook remains positive

DHFL, the sixth largest housing finance company by market cap, surged for the second day in a row, after taking support at its significant upward sloping trendline level. The company declared its Q3FY18 results on January 22, where the company posted 11.4 per cent and 25 per cent revenue and PAT YoY growth, which led to an upbeat move in the stock prices.

During the period, the company’s AUM rose 29 per cent to Rs 1 lakh crore, as against Rs 78,000 crore. Its NIM came in at 3.03 per cent, as against 3.07 per cent, a fall of 4 bps. The C/I ratio stood at 23.04 per cent, as compared to 23.22 per cent earlier. Going forward, considering the gap between the current investment and required investment in housing, government’s 'Housing for All' campaign and affordable housing may create opportunities for the company in the long run.

Technically, the stock has been trading with lower tops and lower bottoms since November 3, 2017 at Rs 679, its all-time high level. Since November 27, the stock witnessed a major multiple resistance at Rs 630-635 levels. Today, on the day of its Q3 results, the stock broke out of this resistance range and closed above the levels. Further, the stock witnessed a more-than-a-month volume breakout and the 14-period RSI re-tested the downward sloping trendline breakout along with positive crossover. Thereby, we can see a potential upside in the stock in the near term.