View Full Version : LIC Housing Finance Limited (NSE:LICHSGFIN) (BSE:500253)

08-20-2015, 10:24 AM
LIC Housing Finance Limited (LICHFL) is a housing finance company. The Company is engaged in the business of providing loans for purchase, construction, repairs and renovation of houses to Individuals, Corporate Bodies, Builders and Co-operative Housing Societies and has its operations within India. LICHFL provides finance on an existing property for business or personal needs and also gives loans to professionals for buying their office space and equipment. The Company also provides finance to persons engaged in the business of construction and sale of residential properties. It has around 204 marketing offices in India. In addition, it appointed nearly 10,500 intermediaries to extend its marketing reach.

Official Website: www.lichousing.com

08-20-2015, 10:25 AM
For 1QFY2016, LIC Housing Finance (LICHF) reported an earnings growth of 18.6% yoy with healthy growth of 29% yoy in net interest income (led by healthy growth in loan book). Healthy growth in Advances LICHF’s loan book grew at a healthy pace of 18% yoy to Rs1,10,400cr during 1QFY2016. Loans to the Individual segment grew by 18.3% yoy. Total disbursements growth was around 10.1% yoy, while Loan Against Property (LAP) disbursements were up 90% yoy and accounted for 8% of incremental disbursement. Loans to the developer segment grew by 6.1% yoy, with disbursements at Rs181cr, up 112% yoy. The LAP portfolio is 4.8% of total loan book while project finance is 2.5%. Going forward, the Management has guided at a loan growth of 18% and disbursement growth of 20% for FY2016. During 1QFY2016, LICHF’s margins were at 2.41% as compared to 2.47% in 4QFY2015. Incremental cost of funds has fallen from 9.25% in 4QFY2015 to 9% in 1QFY2016. Going forward, the Management expects the NIM to expand, due to lower cost of funds and increase in proportion of high yielding LAP in FY2016. `25,000cr worth of loans would be converted from fixed to floating in FY2016, which would be repriced at a higher rate than originally lent, by around 40-50bp. On the asset quality front, the Gross NPA ratio increased by 14bp qoq to 0.6% in the quarter, while the Net NPA ratio increased by 11bp qoq to 0.33% due to seasonal impact. Gross NPAs in the individual loan segment went up to 0.36% as compared to 0.24% in 4QFY2015. The Provision Coverage Ratio (PCR) declined from 52.6% in 4QFY2015 to 45.4% in 1QFY2016. Outlook and valuation: For companies like LICHF, the funding environment has eased; this it will lead to lower cost of borrowing, while retail housing loan growth and outlook remains reasonably good. We expect the company to post a healthy loan book CAGR of 18.7% over FY2015-17E, which is likely to reflect in an earnings CAGR of 20.5%, over the same period. The stock currently trades at 2.4x FY2017E ABV. We recommend a Buy rating on the stock, with a target price of Rs590.

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