Prabhudas Lilladher's research report on LIC Housing Finance
Led by higher provisions, we cut FY23/24/25E PAT by ~13%/3%/3%. LICHF saw a weak quarter yet again; while PPoP was a 4.6% beat driven by higher NIM, earnings were a miss led by spike in provisions due to QoQ increase in PCR to ~51% from ~44%. While provisions for Q3 did not include any writeoffs, company wants to maintain PCR at ~50% which could normalize credit costs in Q4 to 45-50bps from 119bps in Q3. We could not determine a concrete reason for an elevated PCR, since in case of a HFC collateral value and quality is strong. Slower pace of resolutions in builder portfolio and recurring one-time aberrations in quarterly earnings would continue to weigh on the stock.
Outlook
We keep multiple unchanged at 0.9x on Sep’24 ABV and maintain TP at Rs410. Retain ACCUMULATE.
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