NIFTY Stocks: Why Choose Between DHFL and Indiabulls Housing Finance?

Introduction

When considering long-term investment in the NIFTY stocks, investors often face the challenge of choosing between DhulFinancial Limited (DHFL) and Indiabulls Housing Finance Limited (IBHF). While both offer opportunities, the current market presents a plethora of alternative options that might be more suitable for a disciplined long-term portfolio. This article evaluates both DHFL and IBHF, highlighting their financial performance, market growth, and strategic adjustments, to guide potential investors in making informed decisions.

Current Market Options

Instead of getting caught between DHFL and IBHF, investors should explore a diverse portfolio that includes:

Bajaj Finance Bajaj Finserve HDFC Bank Maruti Escorts Yes Bank

This eclectic mix of companies provides various financial products and services, catering to different market segments and risk profiles, making them robust choices for long-term investment.

Performance Comparison: DHFL vs Indiabulls Housing Finance

While DHFL and IBHF have been the focus of many discussions, the current scenario presents compelling alternatives. To provide a more comprehensive analysis, let's delve into the performance metrics of these two companies.

Index DHFL IBHF Net Profit Margin 11% 25% Dividend Distribution (Rs) 5.50 40 Annual Growth Rate 15% 20% Loan Recovery Track Record - Deccan Chronicle, HDIL Liquidity Management Land Bank Sale OakNorth Bank, SBI Loans Global Presence No UK, UAE Hedging Strategic Flexibility Below IBHF Outperforming DHFL

From the table, it is evident that IBHF outperforms DHFL in several key metrics. Here’s a breakdown of why IBHF might be the better choice:

1. Profit Margin and Dividend Yield

IBHF maintains a significantly higher net profit margin of 25% compared to DHFL’s 11%. Additionally, IBHF announces an impressive dividend distribution of Rs40 per share, significantly higher than DHFL’s Rs5.50. These figures highlight IBHF's strong profitability and potential for shareholder returns.

2. Growth and Loan Recovery

IBHF’s growth rate is above 20%, while DHFL’s growth rate is above 15%. In terms of loan recovery, IBHF has a proven track record with successful recoveries from the Deccan Chronicle and HDIL. On the other hand, DHFL lacks this critical recovery history, making it a less reliable choice for investors.

3. Liquidity Management

IBHF demonstrates better management of liquidity through strategic investments, selling stake to OakNorth Bank and providing loans to SBI. DHFL, in contrast, has made a more challenging move by selling its land bank, which might not promise the same returns in the long run.

4. Global Presence and Strategic Flexibility

IBHF has established a global presence in the UK with OakNorth Bank and in the UAE, demonstrating a robust international strategy. DHFL, on the other hand, focuses purely in the premium segment with less visibility in the global market.

Expert Recommendations and Market Outlook

Expert advice often suggests waiting for the situation to clear up before making significant investments. Analysts predict that both DHFL and IBHF might see a rebound by mid-January 2019. This period can be used for thorough research and due diligence, ensuring that investments are made when the market conditions are more favorable.

Conclusion

In the context of NIFTY stocks, Indiabulls Housing Finance Limited (IBHF) emerges as a superior choice over DhulFinancial Limited (DHFL) for long-term investment. Its superior financial performance, robust market presence, and strategic investments offer better prospects for growth and returns.

Evolving the investment portfolio to include a mix of other strong companies like Bajaj Finance, Bajaj Finserve, HDFC Bank, Maruti, Escorts, and Yes Bank could further diversify risk and enhance returns. Remember, careful evaluation and patient waiting can be the key to successful long-term investments in the dynamic and ever-evolving financial markets.