Buy LIC Housing Finance; target of Rs 345: Sharekhan

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Sharekhan's research repor on LIC Housing Finance

LIC Housing Finance Limited (LICHFL) reported steady results with operating performance coming largely in line with expectations (lower provisions resulted in better-than-expected profit), but asset-quality performance was not bright. Moratorium book held fast at 25% of total book (was 25% in Q4FY2021); with individual home loans comprising ~16% and rest being developer and LRD/LAP segment. LICHF has strengths in borrowing profile and has been able to bring down its cost of funds, helped by its strong parent profile; and we believe conservative LTVs and inexpensive valuations make risk-return favourable. We introduce FY2023E estimates and accordingly roll forward the target multiples.

Outlook

We upgrade the rating to Buy with a revised price target of Rs. 345.

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