Buy LIC Housing Finance; target Rs 298: Angel Broking

Angel Broking is bullish on LIC Housing Finance (LICHF) and has recommended buy rating on the stock with a target price of Rs 298 in its November 2, 2012 research report.
  • Language
  • App
  • Subscriptions
  • Specials
  • Sign-In
  • Register
GeStepAhead GrowMyMoney IThe Winning Leap SME Special
Moneycontrol

Home » News » Recommendations

Nov 10, 2012, 04.30 PM | Source: Moneycontrol.com

Buy LIC Housing Finance; target Rs 298: Angel Broking

Angel Broking is bullish on LIC Housing Finance (LICHF) and has recommended buy rating on the stock with a target price of Rs 298 in its November 2, 2012 research report.

Like this story, share it with millions of investors on M3

Buy LIC Housing Finance; target Rs 298: Angel Broking

Angel Broking is bullish on LIC Housing Finance (LICHF) and has recommended buy rating on the stock with a target price of Rs 298 in its November 2, 2012 research report.

Post Your Comments

Share Cancel

(more)

, Angel Broking |

Angel Broking is bullish on LIC Housing Finance (LICHF) and has recommended buy rating on the stock with a target price of Rs 298 in its November 2,  2012 research report.

"LICHF posted a slightly below estimate numbers with net profit growing by 147.0% yoy (on a low base due to standard asset provisioning on individual loans in 2QFY2012) to Rs 243cr (For 2QFY2013). The NII disappointed growing by a moderate 4.5% yoy but lower provisioning expenses aided bottom-line. We recommend a Buy rating on the stock. For 2QFY2013, LICHF’s loan book grew strongly by 23.2% yoy (5.3% qoq) to Rs 69,119cr. Loan growth was driven by loans to the individual segment, which grew by 27.4% yoy to Rs 66,458cr, while loans to the developer segment declined by 33.1% yoy to Rs 2,660cr. The proportion of developer loans to overall loans dipped further from 4.6% in 1QFY2013 to 3.8% for 2QFY2013. The margins were down 35bp yoy, primarily on account of lower share of higher yielding developer loans (3.8% in 2QFY2013 compared to 7.1% in 2QFY2012).

The cost of funds has been on a rising trend over the last year due to the high interest rates. The management has indicated that they would look more towards debt issues rather than bank borrowings to decrease their cost of funds. LICHF aims to increase the proportion of developer loans going forward which in our view should give a push to the margins. Also, the loans given out under fixed-ofloaty scheme (teaser rate loans with a fixed tenure of 3 years) at a fixed rate of 8.9% (between July 2009 and July 2010) are expected to re-price upwards (to at least 10.4%) and are expected to aid in margin expansion. The asset quality of the company remained stable on the gross NPA front (0.60% in 2QFY2013 compared to 0.64% in 2QFY2012), however a decline in provision coverage ratio (52.8% in 2QFY2013 compared to 81.6% in 2QFY2012) led to NPA levels increasing from 0.12% in 2QFY2012 to 0.28% in 2QFY2013.

At the current market price, the stock is trading at a P/ABV multiple of 1.6x FY2014E ABV. Historically, the stock has traded at 0.8-2.1x oneyear forward P/ABV multiple over FY2006-FY2012, with a median of 1.4x, but it has been rerated over the past three years to 1.9x average. Considering that interest rates have a downward bias over the next couple of years and the company has healthy growth prospects, we recommend an Buy on the stock with a target price of Rs 298," says Angel Broking research report.

Institutional holding more than 40% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click here

Buy, Hold, Sell ? Hear it first on M3
Buy LIC Housing Finance; target Rs 298: Angel Broking

See all

Get started using your favorite social network

or

Login using moneycontrol ID

Username
Password

Need help logging in? Reset password.

Don´t have an account? Sign Up

Get started using your favorite social network

or

Simply sign up using this short form

* mandatory

UserName*

Username should be atleast 4 character

Password*

Password should be 8 or more characters,
atleast 1 number, 1 symbol & 1 upper case letter

Alert

Your Password should contain
  • 8 or more characters
  • At least 1 number
  • At least 1 symbol
  • At least 1 upper case letter
Confirm Password*
Email
Already have an account? Login