Buy LIC Housing Fin; target of Rs 495: ICICIdirect

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ICICI Direct research report on LIC Housing FinancePAT jumped 20.6% YoY to Rs 412 crore, higher than our estimate of 400 crore, mainly led by higher-than-expected NII growth NII grew 34.8% YoY to Rs 717 crore, higher than Rs 658 crore expected mainly led by higher-than-expected margins. The NIM increased 15 bps QoQ to 2.56% mainly due to fall in CoF (down 9 bps to 9.29%) Net loans grew in line with estimate at 17% YoY to Rs 114069 crore. LAP portfolio was up by Rs 1066 crore QoQ to Rs 6388 crore Asset quality was maintained with GNPA flat QoQ at 0.6%, (GNPA:683 crore) while NNPA was at 0.32% at 365 crore We have tweaked our earning estimates higher as we factor in rise in loan growth estimates and margins. Consequently, we expect PAT CAGR of 22% vs. 19% earlier over FY16-17E to Rs 2078 crore. We believe NIM improvement is the key catalyst for the stock to get re-rated higher. Return ratios are expected to stay healthy with ~19% RoE and 1.4% RoA by FY17E. We maintain our target multiple of 2.3x FY17E ABV but raise our target price to Rs 545 from Rs 515 earlier, as our FY17E ABV estimate increased to Rs 233 from Rs 222 earlier. We maintain our BUY rating.For all recommendations, click here 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.

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