LIC Housing Finance Ltd. share price target

LIC Housing Finance Ltd Q2FY19 results Comment Operating Income grew by 3.73% to Rs. 4198.22 Cr in Q2FY19 when compared to the previous quarter. Also, it grew by 11.92% when compared with Q2FY18.

NII increased 5.1% YoY to | 1012 crore. It was mainly led by loan growth of 16.2% YoY to | 175953 crore & steady QoQ NIMs of 2.35% Loan traction was led by developer portfolio, which increased at a strong rate of 83% YoY to | 10852 crore (comprising 6.17% of total loans). Retail loans increased 13% YoY to | 165102 crore. Overall disbursement growth was strong in Q2FY19 at 30% YoY Headline asset quality was steady QoQ. The GNPA ratio was at 1.2%. Gross NPAs in individual segment were flat at 0.81%...

12 October 2018 LIC Housing Finance An analysis of the liability structure shows that LICHF still has a meaningful chunk of relatively high-cost liabilities that are set to mature over FY19-20. Assuming refinancing of these NCDs at 9.0%, the impact of overall cost of funds is only 15-20bp each year. Our base case assumption is that the NCDs maturing in FY19/20 as well as the new NCDs issued are at 9.0%. We have done a sensitivity analysis to see impact on PBT due to refinance of maturing NCDs at various interest rates.

Asset quality deteriorated with a higher GNPA of 1.21% (+49bps YoY) while, NPAs in the Individual Loan book increased to 0.81%. PAT grew by 18%(YoY) on account of lower than expected provisioning. We expect loan growth to sustain due to strong mix of salaried class in the clientele and factor a loan-book growth of 15% CAGR over FY18-20E. NII...

LIC Housing Finance Q1FY19 result was below our estimates on the Net Interest Income front. Disbursement growth declined to 10% (15% in Q1FY18) and Loan growth remained stable at 15%. NII growth remained muted at 7% YoY. On the operational front, PPP increased by 10.6% YoY due to a decline in the employee expenses. The asset quality has declined with GNPA touching 1.21% vs. 0.72% in Q1FY18 on the back of GNPA in the individual segment increasing to 0.81%. Previous quarter's numbers are adjusted and PAT for Q1FY18 is revised upwards by 2% as it moves towards Ind AS accounting. We have an ACCUMULATE rating on the stock with a target price of Rs 618,...

Our constructive thesis premised on the huge growth opportunity in the housing finance space and the government's push for housing for all'. LICHF's unparalleled distribution network (through agents) further augmented by geographical expansion will be a key growth enabler hereon. Improving margins coupled with better asset quality will boost profitability and crystallize into a RoAA jump of 11bps over FY18-20E. Maintain BUY with a TP of Rs 627 (2x Mar-20 ABV of Rs 314) In a seasonally weak quarter, LICHFs performance was grossly underwhelming. Deterioration in asset quality (despite a large recovery of ~Rs 700mn) was higher than the usual 1Q blip as individual GNPAs spiked (81bps vs 42bps QoQ). Though overall growth (+15%) was respectable, tepid growth in the core segment (up merely 9% YoY) lagged comparable peers. Despite the recent rate hikes (30bps over 1Q) the sequential dip (15bps to 2.34%) was also disappointing.

Headline asset quality continued to witness deterioration in Q1FY19. GNPA ratio saw a sequential increase of 43 bps to 1.21%, partly seasonal also. As per NHB norms, total gross NPAs of the company were at | 2036 crore vs. | 1304 crore in Q4FY18 (may not be fully comparable in Ind-As). Gross NPA in individual segment was 0.81% Margins remained under pressure with ~15 bps YoY decline to 2.34%, lower than our estimate. Advances traction came in line with estimate at 15% YoY to | 168652 crore. Individual book increased...

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 95% of the loan book with the balance coming from...

LIC Housing Finance (LICHF) reported 1Q19 earnings of INR 5.68bn, up 18% YoY on IndAS basis. Key highlights i) Disbursement grew by 10% YoY while Loan book grew 15% YoY supported by non-core segments - LAP (42% YoY) and developer segment (50% YoY) while individual segment remained muted 9% YoY. Proportion of non-core segments has now increased to 21% vs. 16.7% YoY. ii) There was some pressure on asset quality as GNPL ratio (Stage 3) increased 48bps YoY/42bps QoQ to 1.2% while coverage ratio declined to 25% (vs 48% in 1Q18 and 52% in 4Q18). iii) Pressure on spreads continued as calculated spreads declined to 1.31% (vs. 1.50% in 4Q18 and 1.48% in 1Q18). Company has increased its...

LICHF is the fourth-largest mortgage finance company in India. It provides loans for homes,...