Hold LIC Housing Finance; target of Rs 430: Prabhudas Lilladher

Prabhudas Lilladher recommended hold rating on LIC Housing Finance with a target price of Rs 430 in its research report dated August 04, 2023.

Broker Research

August 07, 2023 / 21:24 IST

Hold

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bselive
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Volume

Todays L/H

Prabhudas Lilladher's research report on LIC Housing Finance

We raise FY24/25E PAT by 13%/6% as NIM is increased by 27/13bps due to faster repricing of asset yields in FY24E, given higher proportion of fixed rate borrowings (~60%). LICHF reported a mixed quarter; while loan growth was softer and asset quality saw a blip, PAT beat PLe by 10% due to better NII/NIM. Company raised NIM guidance for FY24E from 2.5% to 2.7%. Disbursals and asset quality were weaker in Q1’24 since operations and collections were impacted as 1) restructuring led to transition of manpower, impeding staff bandwidth and 2) technology platform witnessed glitches. As these issues have been sorted, disbursals have normalized in Jun’23 and Stage-3 should reduce. While consensus earnings upgrade positively impacted the stock, earnings quality should improve for further re-rating.

Outlook

We maintain multiple at 0.9x on FY25E ABV and raise TP to Rs430 from Rs410. Retain HOLD.

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