LIC Housing Finance Ltd. share price target

Demand revival in real estate projects (post reduction in stamp duty by Maharashtra Government) and continuous initiatives to boost affordable housing are likely to be the key triggers for home buying. HFCs are likely to be the biggest beneficiaries and LIC Housing Finance will lead the non-banking home financers. Moreover, the company's 2QFY21 performance and management commentary acknowledge our conviction that the company is preparing for cautious and prudent growth keeping the asset quality intact. LICHF witnessed a demand revival with disbursement growing ~250% QoQ (2.2% YoY) with wholesale disbursement of 242% QoQ (80% YoY). Furthermore, the overall collection efficacy has improved to ~96% as on 2QFY21. The bank declared that ~3% of...

to 1.7% remains elevated despite 87% salaried class focus (c) developer loan NPA at 17% although 2/3 big ticket cases stand in final stages of resolution. While NIMs stood steady this quarter, the same do not stand sustainable for FY21 as balance transfer cases to rise in light of high competitive intensities. We believe FY23 should witness revival (loan growth 15%+, NIMs 2%+ and NPAs 2.5%; current estimate 3.5%). As macro tailwinds signal beginning of bottoming out of painful home finance cycle, we upgrade LICHF to HOLD and tweak valuation multiple to 0.9x PABV Sep'22 estimates arriving at price...

LIC Housing Finance Limited is one of the biggest mortgage finance company in India

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...

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,...

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...

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.

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...