Buy LIC Housing Finance; target of Rs 525: Axis Direct

 Axis Direct's  research report on  LIC Housing FinanceUnderlying fundamentals remain intact with NIM and loan growth maintaining their pace though one-offs (provisioning and staff cost) marred PAT in Q1. We expect the company to continue to benefit  from tailwinds of the government’s impetus on affordable finance and from rollout wage hikes by Central Pay Commission – hence remains our top pick in the HFC space. Q1 highlights:PAT of Rs 4.1 bn (up 7% YoY), dragged down by ageing of provisions on an old project NPA& one-off employeecosts. Loan growth at ~15% YoYwith mix progressively shifting to LAP (9.3% of the loan book) and developer loans (2.9%). NIM up  ~20bps YoYat 2.61% (down 10 bps QoQ owing to seasonality).

Maintain BUY with TP of Rs 600(2.9x/2.5x FY17E/FY18E P/ABV): At CMP of Rs 525, the stock trades at 2.2x FY18E P/ABV of Rs 243, implying an upside of 14%.