InvestorQ : Indiabulls Housing results were quite disappointing on Wednesday. Should I sell my Holding in this stock or average my positions?
Dawn Cherian made post

Indiabulls Housing results were quite disappointing on Wednesday. Should I sell my Holding in this stock or average my positions?

Answer
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Dilmini Mercia answered.
1 year ago


The Indiabulls Housing results come in at a time when the stock price has corrected sharply from higher levels on liquidity concerns and also the company is in the midst of merger talks with the Lakshmi Vilas Bank.

How did the Q4 results look like?

For the fourth quarter, Indiabulls Housing reported a 7% fall in net profits to Rs.1006 crore. Its total loan disbursals doubled in the fourth quarter compared to the third quarter. On an overall basis the company saw a contraction of its loan book by nearly 2%, largely on account of the liquidity crunch in the market last year. Also the crunch led to a rise in cost of borrowings, which put pressure on the margins.

Should you buy more of Indiabulls Housing Finance?

While the company is still quoting at nearly half of its peak price of last August, the cost of funds is likely to continue to impact its profits. However, the stock is extremely valuable in P/E terms. At a P/E of just Rs.8.7, the stock is extremely attractive price. The merger with LVB (once approved by the RBI), will give Indiabulls a footprint in the South as well as access to a banking license. Considering the prospects of the sector, one can look at adding more of Indiabulls at lower levels from a long term investment perspective.