LIC Housing Finance (LICHF) saw improved traction in individual business during the quarter while operating performance was steady. NII for LICHF saw flattish growth of 2.2% YoY at Rs. 1281 crore, mainly on account of 6 bps YoY decline in margins to 2.36. Recent management commentary indicated that margins were benefitted from lower funding cost which was down by 36 bps in Q3FY21 and 83 bps in current fiscal, as liquidity environment remained favourable for the company. Other income jumped 73% YoY to Rs. 48 crore aiding topline. Cost-to-income sequentially was steady at 13.4% vs. 13.2%. Provisions declined YoY by 54% to Rs. 181 crore but QoQ were up 75%. Total provisions for Covid related and standstill accounts is to the tune of ~Rs. 400 crore. PAT for the quarter was up 22% YoY to Rs. 727 crore.
Valuation & Outlook
Business growth is seen picking up with low interest rates, stable property prices and government's push for growth aiding demand for housing. Margins are expected to remain steady with competitive environment keeping yields in check but softening of costs to cushion NIMs. Improvement in collection provides comfort on asset quality, though relatively lower provision buffer is seen keeping near term credit cost higher. Strong parentage and higher proportion of individual loans provide comfort. However, with the recent run up in the stock price, we believe there is limited room for upside. Thus we downgrade our rating from BUY to HOLD with a revised TP of Rs. 475 (earlier Rs. 345).
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_LICHF_Q3FY21.pdf
Shares of LIC HOUSING FINANCE LTD. was last trading in BSE at Rs.469.75 as compared to the previous close of Rs. 476.25. The total number of shares traded during the day was 372469 in over 6688 trades.
The stock hit an intraday high of Rs. 482.95 and intraday low of 466. The net turnover during the day was Rs. 175961701.