Prabhudas Lilladher's research report on LIC Housing Finance
Q1FY21 earnings for LICHF was a beat on most parameters led by lower interest expenses, steep decline in operating costs and unexpected continued lower provisioning. While moratorium book stands at 25% of overall loans, business-wise morat numbers have not shown improvements as recoveries remain elusive. While it’s COVID assessment on asset quality is uncertain, Mngt hopes of higher transition of moratorium customers to standard. We maintain our reservations on developer/LAP stress and foresee low near term levers to healthy return profile. Against this backdrop, we maintain weak loan growth cycle (6-9%), imminent NIM pressures (1.5%) led by downward asset re-pricing and elevated NPAs (3-3.5%) for FY21-22E. Continued lower provisioning and further anticipated improvement in opex prompt us to tweak our FY22-23 EPS estimates higher by 20-25%.
We believe FY23 should witness revival with loan growth expected at 14%, NIMs at 2.15%+ and NPAs declining to 2.5%. We reiterate REDUCE recommendation and assign 0.8x PABV as we rollover multiple to Sep’22 estimates arriving at price target of Rs282.
For all recommendations report, 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.