Moneycontrol Bureau
Though Nomura is disappointed with LIC Housing Finance March quarter result, it still has a buy rating with a target price of Rs 575 per share. The brokerage firm says slowdown in mortgage disbursements, higher prepayment rate in mortgage book and miss in spreads considering big asset mix shift are few disappointing factors in the state-run finance company's Q4 results.
According to Nomura, LIC Housing Finance may face earnings cut by the street due to slowdown in core mortgage portfolio. It adds that slowdown in mortgage book is driven both by slower disbursement growth and higher prepayment rates continuing in the past. LIC Housing Finance's total loan book grew 15.5 percent on annual basis driven by individual book growth of 15.2 percent year-on-year.
Nomura adds that LIC Housing Finance's core mortgage book now growing just 10 percent YoY clearly implies a drop in market share in mortgages.
LIC Housing Finance 's fourth quarter profit missed analysts expectations on Monday, rising 18.5 percent to Rs 448 crore compared to Rs 378.2 crore in year-ago period, impacted by higher tax expenses and provisions. Net interest income, the difference between interest earned and interest expended, grew by 26.5 percent to Rs 822 crore from Rs 650 crore in same period, which was in line.
In the financial year 2015-16, profit rose 19.5 percent to Rs 1,667.7 crore and net interest income climbed 31 percent to Rs 3,089.5 crore compared to previous year. Provisions/write off surged significantly to Rs 146.5 crore from Rs 7.25 crore in same period.Posted by Nasrin SultanaFollow @NasrinzStory
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