HDFC Securities' research report on LIC Housing Finance
LICHF’s 1QFY21 operating performance was only slightly higher than estimates, but earnings were considerably higher than estimates, on account of lower-than-expected provisions (LLPs and tax). AUM growth was the slowest since FY09, and the moratorium portfolio remained sticky at 25% of loans (77% in the developer book).
Outlook
While we have increased our earnings, we maintain our REDUCE rating with a target price of Rs 296 (0.9xFY22E), especially after the recent run-up. LICHF faces several challenges in the near term: (1) a sticky moratorium book (particularly in the developer book), (2) inadequate coverage with minuscule Stage I & II provisions and negligible COVID-19 related provisions, and (3) stiff competition from banks, which would constrain growth and NIMs.
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.
Read More
