Buy LIC Housing Finance; target of Rs 340: Motilal Oswal

Motilal Oswal is bullish on LIC Housing Finance has recommended buy rating on the stock with a target price of Rs 340 in its research report dated June 22, 2020.

Broker Research

June 23, 2020 / 18:58 IST

26 Aug, 2025 12:21

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Motilal Oswal 's research report on LIC Housing Finance

LICHF’s 4QFY20 PAT was down ~40% YoY to INR4.2b. Reported PAT missed our estimates by 20%, driven by lower NII, higher operating expenses and taxation expenses, partially offset by lower credit costs. In FY20, while PPoP grew 7% YoY to INR43b, PAT was largely stable at INR24b. RoA/RoE for FY20 stood at 1.2%/14%. We have cut our EPS estimates for FY21/FY22 by 10/14% to account for the slower asset growth, pressure on margins and higher credit cost. While we expect ROAs to be muted at 1-1.1%, higher leverage (~11x highest amongst NBFCs) should lead to ROEs of 11-12% over FY20-23E. Buy with target price of INR340 (0.8x FY22E BV)

Outlook

In addition, LICHF’s Tier I ratio of 12.3% is lower than many peers. While ROEs are likely to be muted at 11-12%, valuations factor in the near-to-medium term challenges. Hence, maintain Buy with TP of INR340 (0.8x FY22E BVPS).