Hold LIC Housing Finance; target of Rs 460: Prabhudas Lilladher

Prabhudas Lilladher recommended hold rating on LIC Housing Finance with a target price of Rs 460 in its research report dated November 02, 2023.

Broker Research

November 06, 2023 / 12:28 IST

Hold

Prabhudas Lilladher's research report on LIC Housing Finance

LICHF reported yet another weak quarter. While PAT was a beat by 2.8%, loan growth was muted at 6.0% YoY and provisions remain lofty. Disbursals were in-line and muted loan growth was led by higher repayments which was partly due to closure of a large developer account. Tech issues that were dragging disbursals have been alleviated and company sees loan growth of 10-12% in FY24E which would be achieved on back of better sanction to disbursal ratio (80% in Q2’24; normal 90-95%). However, we remain circumspect on delivery of the same due to heightened competition from banks. We expect a loan growth of 7-8% over FY2-26E. Although stage-3 declined QoQ due to (1) TWO of Rs9.25bn and recoveries of Rs2-3bn, credit costs remain elevated owing to interest income write-offs.

Outlook

We maintain our multiple at 0.9x but increase TP to Rs460 from Rs430 as we roll forward to Sep’25 ABV. Retain HOLD.

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