LIC Housing Finance Ltd. share price target

Loan growth continue to remain steady at 16% YoY with individual loans growing at 14.9% YoY, while developer loan on a lower base grew at strong pace of 62.3% YoY to | 13614 crore (6.9% of total loan). The management's focus continue to remain on affordable housing compared to LAP/LRDs; consequently share of LAP/LRD declined to 16.9% vs. 17.2% in Q4FY19. Asset quality witnessed deterioration with absolute stage 3 default at | 1757 crore vs.| 1524 crore. Stage 3 default ratio surged 44 bps QoQ to 1.98%. Absolute GNPA was at | 3887 crore out of which | 2307 crore was...

LIC Housing Finance (LICHF) reported weak numbers in Q1FY2020 with a marginal pickup in disbursement. However, a q-o-q decline in net interest margins (NIMs) and decline in asset quality on a sequential basis were dampeners. Loan growth was healthy, but was largely driven by loans to developer (which has historically been a pain point for the HFC, and also led to higher NPAs). We believe, LICHF may be vulnerable to margin pressures going forward as well as developer loans tend to turn sour, which can affect profitability. Moreover, due to intensifying...

Asset quality pressures in wholesale book; cut estimates by 4-5% Motilal Oswal values your support in the Asiamoney Brokers Poll 2019 for...

The provisions have increased by 33% compared to that of FY18, mainly supported by 54% rise in provision for non performing assets. The Gross/Net NPA have declined to 1.53%/1.07% in Q4FY19, compared to 0.78%/0.43% in Q4FY18, and the stage 2 and 3 exposure at default assets have increased YoY by 52bps and 77bps respectively. At present, the RoA and RoE of LICHF stands at 1.34% and 16% of India (LIC), which is the largest insurance provider in India. With over 250 branches, ~2,300...

Between FY17-19, higher yielding and riskier non-core segments contributed 45% of incremental AUMs. These non-core segments now form ~24% of the book vs. 16.4% in FY17. LICHF has consciously taken on more risk by favoring non-core (project and LAP) segments, as growth and margins in its core business (retail housing loans) compressed. In spite of this, margins remained flat while asset quality worsened making this an unfavorable trade-off. The alarming rise in delinquent loans may be a harbinger of the stress that follows. We have thus downgraded our multiple to 1.25x from 1.5x An uncharacteristic (of 4Q) deterioration in asset quality, subdued core segment growth, the rising share of riskier loans (and increasing stress) prompt us to downgrade the valuation multiple for LICHF. Maintain NEUTRAL with a TP of Rs 471 (1.25x FY21E ABV of Rs 377) despite the recent correction (-12% in a month).

During the quarter, net interest income (NII) grew by 21.6% y-o-y to Rs. 1,222.5 crore, mainly driven by strong loan growth and some margin expansion on a y-o-y basis as the housing finance company (HFC) demonstrated its ability...

Background: LIC Housing Finance (LICHF) provides housing loans to individuals and corporate bodies. The company is also engaged in the home equity space. The company is a distant second player among housing finance companies in India. LIC Housing has an established network of direct selling agents and home loan agents. Through its subsidiary, LIC Housing operates homes for senior citizens. Loans to individual including LAP forms 93.3% of the loan book with the balance coming from...

Loan growth remained stable at 16.2% YoY at | 194646 crore on the back of healthy traction in LAP & developer financing. Consequently, their share of LAP has increased from 12.6% in FY18 to 17.20% in Q4FY19 & developer portfolio has increased from 3.8% in FY18 to 6.25%. Overall disbursement growth was weak at 7.2% YoY but strong sequentially. Headline asset quality deteriorated marginally with GNPA ratio increasing to | 2972 crore by 27 bps QoQ to 1.53%. Gross NPAs in individual segment...

6 May 2019 4QFY19 PAT increased 17% YoY to INR5.7b (3% beat), driven by better-than- expected margins and lower credit costs, despite a sharp rise in NPAs (+30% QoQ). Share of builder loan portfolio increased to 6.7% v/s 6.2% a quarter ago and 4.9% a year ago. Management guided for continued growth in the builder loan segment in FY20, as it remains a focus area for the company This resulted in 15% QoQ NII growth v/s 6% loan growth. In absolute terms, GNPA increased 30% QoQ (INR6.8b) to INR29.7b, while individual GNPA increased 30%+ QoQ (INR4.7b) to INR20.7b. Builder loan GNPA in % terms increased to 6.9% v/s 6.1% a quarter ago, while absolute GNPA increased to INR9b v/s INR7b a quarter ago.

Steady Loan growth with increasing individual GNPA... Disbursements witnessed a growth of 4% YoY driven by developer finance loans while Net Interest Income grew by ~42%YoY. Net Interest Margin was flat on aQoQ basis at ~2.33%. Asset quality deteriorated with a higher GNPA of 1.26% (+39bps YoY) while, NPAs in the individual loan book increased to 0.93%. PAT grew by 26%(YoY) on account of provision reversing. We expect loan growth to sustain due to strong mix of salaried class...