Accumulate LIC Housing Fin; target of Rs 275: PLilladher
Prabhudas Lilladher is bullish on LIC Housing Finance and has recommended accumulate rating on the stock with a target of Rs 275 in its February 14, 2013 research report.
February 20, 2013 / 11:11 IST
Prabhudas Lilladher is bullish on LIC Housing Finance (LICHF) and has recommended accumulate rating on the stock with a target of Rs 275 in its February 14, 2013 research report.
"LICHF reported PAT of Rs23.9bn which was lower than expected due to a miss on margins and a negative surprise on asset quality. We continue to maintain that street expectations of margin improvement in FY14 will not materialize and slippages on builder book despite very cautious lending over the last 24 months is an added concern. We maintain our cautious view on LICHF and our .Accumulate. rating is primarily due to undemanding valuations."
"Gross NPAs inched up surprisingly in Q3FY13 as three builder accounts (Rs1.6bn) slipped despite significant caution over the last 24 months in builder financing. Management has indicated that these are mid-sized builders and all three slippages are from different geographies. Consensus has been more concerned on LICHF's margins and large slippages in builder book were not anticipated and this could potentially slow down the build-up in the builder book. Margins continued to disappoint with flat NIM reported QoQ v/s 5-10bps improvement expected. Even adjusted for the reversal in the builder book slippages, NIMs have disappointed. Incremental spreads of 1.79 percent is a positive trend but rate cut taken (Nov-12)+ possible slowdown in the builder book pose a risk to high incremental margins reported.""The QoQ growth of 6.0 percent in the builder book after consequent eight quarters of sequential decline was a positive. However, given the slippages in the segment in Q3FY13 (three accounts) raises concerns on the build-up, going ahead. The growth in the retail book has been steady (5.2 percent QoQ)," says Prabhudas Lilladher research report.FIIs holding more than 30% 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 on the attachment 
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