CRISIL Research has assigned a CRISIL IER fundamental grade of '4/5' (pronounced 'four on five') to Indiabulls Housing Finance (Indiabulls). The grade indicates that the company's fundamentals are 'superior' relative to other listed equity securities in India.

According to CRISIL, fair value of the stock is Rs 632 a share. At the current market price of Rs 582 a share, valuation grade is '3/5' indicating that the market price is aligned. The grades are not a recommendation to buy, sell or hold the graded instrument, or a comment on the graded instrument’s future market price or its suitability for a particular investor.

CRISIL Research expects Indiabulls' total operating income (net of interest expenses) to increase at 17% CAGR over FY15-17 to Rs 45.2 billion driven by loan book growth. The loan book is expected to grow at a CAGR of 20% over FY15-17 to Rs 754 billion driven by industry tailwinds, the company's distribution reach and established market position. We expect net interest margin to remain stable at 4.2% during the same period. CRISIL Research expects PAT to increase at 18% CAGR over FY15-17 to Rs 26.3 billion. Adjusted book value is estimated to increase to Rs 234 a share in FY17 from Rs 181 a share in FY15.

CRISIL Research has used the price-to-book (P/B) multiple method to value Indiabulls and have assigned a P/B multiple of 2.7x to FY17 adjusted book value to arrive at a fair value of Rs 632 a share.