LIC Housing Finance (LICHF) is one of the largest housing finance companies in India. It provides long-term finance to individuals, professionals and builders of residential flats and houses. The company has a wide...

Loan book for the quarter was at | 209817 crore, up 6% YoY, with major proportion of loan mix skewed towards individual loans at | 195176 crore (up 6% YoY) while developer loans grew 7.5% YoY to | 14641 crore. Asset quality deteriorated with GNPA ratio at 2.83% against 1.98% in Q1FY20 though it remained stable sequentially. NII growth remained sluggish at 3% YoY to | 1220.6 crore, on account of slower credit growth. NIMs dipped ~3 bps YoY to 2.32% on the back of lower yields. Provisioning was down 78% YoY to | 56.25 crore. Lower tax rate led to healthy PAT...

LICHF faces several challenges in the near term: (1) a sticky moratorium book (particularly in the developer book), (2) inadequate coverage with minuscule Stage I & II provisions and negligible COVID-19 related provisions, and (3) stiff competition from banks, which would constrain growth and NIMs. LICHFs 1QFY21 operating performance was only slightly higher than estimates, but earnings were considerably higher than estimates, on account of lower-than-expected provisions (LLPs and tax). AUM growth was the slowest since FY09, and the moratorium portfolio remained sticky at 25% of loans (77% in the developer book). While we have increased our earnings, we maintain our REDUCE rating with a target price of Rs 296 (0.9xFY22E), especially after the recent run-up.

LIC Housing Finance Limited (LICHFL) reported steady results with operating performance coming largely in line with expectations (lower provisions resulted in better-than-expected profits) but asset-quality performance was not bright. Moratorium book holding fast at 25% of total book (was 25% at Q4FY2021) was a dampener since most peers have reported a reduction in the same. Of the 25% loan book under moratorium, individual home loans accounted for 16% and rest were developer segment, which is a concern. Nearly 77% of developer loan book was under moratorium. However, developer loans were at ~7% of the total book; hence,...

25 August 2020 LICHF reported 34% YoY growth in 1QFY21 PAT to INR8.2b (60% beat). The beat was driven by better-than-expected NII as well as lower credit costs. This is a key monitorable for us. This was largely driven by smaller cities (share of disbursements in the Top 7 cities declined from an average of 45% to 35%). The loan book was largely stable at INR2.1t. Note that the loan mix has been largely stable for the past six quarters. Incremental cost of funds was down ~100bp to 6.8%, in line with the rates in the economy. Overall cost of funds declined 20bp QoQ to 7.9%. Operating expenses were up 28% YoY to INR1.37b, largely driven by a 30% YoY increase in employee expenses to INR796m. However, the company did not make any large COVID-19-related provisions this quarter.

No exclusive COVID provisions; Mngt believes ECL provs. stand sufficient interest expenses, steep decline in operating costs and unexpected overall loans, business-wise morat numbers have not shown improvements as recoveries remain elusive. While it's COVID assessment on asset quality is uncertain, Mngt hopes of higher transition of moratorium customers to...

LIC Housing Finance (LICHF) reported 34% YoY growth in net profit, led by 78% YoY decline in provisioning and a lower effective tax rate. Operating profit was down 1.8% YoY and up 25.8% QoQ. NII growth was subdued at 3.3% YoY on account of muted credit growth even as NIM expanded by 22bps QoQ. Total loan book grew by 6.1% YoY and 0.9% QoQ. Individual loans were down marginally QoQ while the developer book reported a net addition of Rs3.2bn QoQ. Disbursements stood at Rs35.6bn with >85% going towards individual home loans. Disbursements in the individual non-home loans and developer loans segments were low. June 2020 disbursements saw a significant pick-up post partial opening up of the economy and...

Weak 4Q, anticipating weaker FY21; downgrade to accumulate LIC Housing Finance (LICHF) reported a weak quarter with NII and PPOP coming in 9% and 26% lower than our estimate, respectively. The loan book growth too was weak, at 6.9% YoY and 1.1% QoQ, resulting in a net addition of Rs2.3bn only. Overall disbursements were down 14% QoQ. The impact on business generation was mainly on account of the lockdown. In the project lending segment, the company has curtailed disbursements quite significantly, owing to asset quality pressures. For the quarter, project loans disbursed amounted to Rs4.13bn, down 56% QoQ. In the individual home loans segment, disbursements were down 28% YoY and 17% QoQ. Individual...

We maintain our REDUCE rating with a TP of Rs 263 LICHFs 4Q performance disappointed across all fronts- (1) AUM growth slowed to a ~12 year low, (2) NIMs dipped sharply, to the lowest level in the ~7 years and asset quality deteriorated, with GS-III rising for the 6th straight quarter. Despite seemingly attractive valuations and strong parentage, we maintain our REDUCE rating with a TP of Rs 263 (0.9xFY22E). The co. faces several headwinds- (1) stiff competition from banks will pose increasing challenges on the growth and NIM fronts, (2) COVID-19 will exacerbate ongoing asset quality troubles (especially in the non-core book).

operating costs (85%QoQ/58%YoY). While it's COVID assessment on asset quality is uncertain, yet 75% developer loans & 35% LAP fall under morat and weak collections stands worrisome. Moreover, LICHF existing asset quality stands appalling led by 17% developer NPA, 1.8% individual book NPAs and ~2% credit costs. FY20 witnessed subdued loan traction (2%CAGR) and doubling of absolute NPAs. Against this backdrop, we expect weak loan growth cycle (6-9%), imminent NIM pressures (1.4-1.7%) and elevated NPAs (3-3.5%) for FY21-22E. Our EPS estimates do not change materially as we...

22 June 2020 LICHFs 4QFY20 PAT was down ~40% YoY to INR4.2b. Reported PAT missed our estimates by 20%, driven by lower NII, higher operating expenses and taxation expenses, partially offset by lower credit costs. In FY20, while PPoP grew 7% YoY to INR43b, PAT was largely stable at INR24b. RoA/RoE for FY20 stood at 1.2%/14%. We have cut our EPS estimates for FY21/FY22 by 10/14% to account for the slower asset growth, pressure on margins and higher credit cost. While we expect ROAs to be muted at 1-1.1%, higher leverage (~11x highest amongst NBFCs) should lead to ROEs of 11-12% over FY20-23E. The loan book grew 2% QoQ/ 8% YoY to INR2.1t. The share of builder loans has been stable QoQ and YoY at ~7%. While this was partly mitigated by lower cost of funds, spreads declined 25bp QoQ to 1.

LIC Housing Finance (LICHF) is one of the largest housing finance companies in India. It provides long-term finance to individuals, professionals and builders of residential flats and houses. The company has a wide...

LIC Housing Finance Ltd saw muted growth in profit to `598 Cr vs. `597 Cr YoY on the back of increased provisioning to `396 Cr vs. `132 Cr YoY. Core operating profit grew 15% YoY on the back of moderate loan growth of 13% YoY. NIMs have improved to 2.42% vs....

Strong growth in NII on improved liquidity LIC Housing Finance is one of the largest housing finance companies in India. It provides long-term finance to individuals, professionals and builders of residential flats and houses. The company has a wide...

LIC Housing Finance (LICHF) reported its 3QFY20 results with the key pointers being: (1) Headline asset quality deteriorated led by retail (2) Cost of funds improved; NIM stable QoQ (3) Selective in project level disbursals (See comprehensive conference call takeaways on page 2 for significant incremental colour). Per se, on the key P&L; items, LICHF posted NII growth of 16% YoY at Rs12,537mn, PPOP growth of 33% YoY at Rs11,360mn while PAT was flat YoY at Rs5,975mn. We have revised our estimates for FY20/FY21/FY22 and retained Buy rating on LICHF, revising our target price to Rs512 (from Rs518 earlier) and valuing the stock at 1.2x H1FY22E P/BV. Headline asset quality deteriorated led by retail: Of the total Rs8bn worth of slippages during the quarter,...

LICHF's performance trajectory across fronts, over the past few qtrs points to structural weakness. Our NEUTRAL stance is premised on the continued rise in bad loans (particularly sharp rise in LICHF's core segment this qtr) accompanied by slower loan growth (as banks appear to be grabbing m-share) and possible margin stress. The dual trend of slowing growth and asset quality deterioration at LICHF persisted into 3QFY20. Maintain NEUTRAL with a TP of Rs 471 (1.25x Dec-21E ABV of Rs 377).

both on core/non-core book can further de-rate the stock further despite already trading at lowest band. While Budget may throw positive surprises possibly boosting payments from laggard borrowers, there is no quick fix for the deepened weakness in retail and high value corporate book of LICHF. Against this backdrop, we value the Co. at lower multiple of 1.1x PABV...

LIC Housing Finance is one of the largest housing finance companies in India. It provides long-term finance to individuals, professionals and builders of residential flats and houses. The company has a wide...

LIC Housing Finance posted healthy operating performance for Q2FY20. Net interest income (NII) rising by 19.3% and Net interest margins (NIM) remained largely stable. However, the asset quality continues to deteriorate with gross NPA at 2.38% as compared to 1.98% during Q1FY20, largely led by rise in the developer segment NPA which has increased to 14.8% from ~11% in the previous quarter. Management is hopeful of recovery going ahead but concerns are likely to persist and remain as the key overhang on the stock. Thus,...