Re: {LONGTERMINVESTORS} LIC Housing Finance - thread
RAJESH DESAI
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CA. Rajesh Desai
RAJESH DESAI
LIC Housing Finance April-June net down 11.28 pct
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CA Mihir Desai
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CA. Rajesh Desai
RAJESH DESAI
Moneycontrol BureauLIC Housing Finance 's (LICHF) first quarter (April-June) net profit moderated more than 11% year-on-year to Rs 228 due to higher interest cost, which also dented its net interest income marginally by Rs 11 crore to Rs 350. The numbers were below the market estimates. Analysts on an average had expected net profit at Rs 282 crore and net interest income of Rs 406 crore.
“Business environment has been very challenging," V. K. Sharma, director & chief executive LIC Housing Finance was quoted in a company release.
"Margins have been under strain owing to the high interest rate regime and high borrowing costs that has prevailed during the quarter and a lower developer loan portfolio. In Q1, developer loan disbursals have started to improve, which is likely to help increase the margins going forward," he said.
The lender's outstanding loan portfolio stood at around Rs 65,650 crore compared with Rs 52,880 crore a year back, an expansion of 24% y-o-y. Individual loans constituted majority of the portfolio to the tune of 95%. The housing finance industry on an average, is expecting around 18-20% loan growth in 2012-13.
During the quarter, LICHF sanctioned Rs 4,900 crore loans to individuals, a growth of 33% from a year back while it sanctioned around Rs 410 crore loans to builders as against Rs 5 crore in the corresponding quarter of the previous year. The lender had virtually stopped extending credit to developers 14 months back due to an alleged involvement of one of its senior executives in a loan scam.
India's second largest mortgage lender disbursed nearly 4,500 crore housing loans to individuals while developers got a disbursal of Rs 320 crore.
The lender's gross non-performing ratio improved from 0.84% to 0.71% y-o-y basis. However, net NPA ratio remains almost flat at 0.38% suggesting that up-gradations may be less than fresh slippages.
When a bad loan account repays its previous dues and start performing as standard asset, it is called up-gradation. Similarly, if a new loan account slips into non-performing territory, it is termed as fresh slippages.
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CA. Rajesh Desai
RAJESH DESAI
HSBC 'Overweight' on LICHF
HSBC has reiterated its 'Overweight' rating on LIC Housing Finance and set target price of Rs 306. LIC Housing is currently trading at 12-month rolling multiples of 10.6x PE and 1.7x PB, which is close to its 3-year average. "With our outlook on its growth and earnings prospects remaining fairly stable, we continue to value LICHF at our target multiples of 10x PE and 2x PB," said an HSBC report. Accordingly, at these target multiples combined with rolling forward earnings by three months, but offset by the earnings cut, HSBC has retain the target price at Rs 306, implying a potential return of 24.9%, it said .
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CA. Rajesh Desai
RAJESH DESAI
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CA. Rajesh Desai
Rajesh Desai
LIC Housing Finance – Q3: Lumpy slippages impact performance
LIC Housing Finance reported rise in absolute gross NPAs (up 30% QoQ) due to slippage of three project loan accounts (~Rs 1.6 bn; 15% provided for in Q3). These accounts are adequately secured (collaterals of 2x exposure) and as per the management, these delinquencies were due to temporary cash flow delays. Quality of retail portfolio improved with reduction of Rs 440 mn in retail NPAs. Higher provisioning expenses impacted PAT (down 23% YoY at Rs 2.4 bn).
Business growth momentum was maintained with loan book rising by 24% YoY. Interest spread remained sequentially stable at ~1.1% led by stable average yields (10.8%) and cost of funds (9.7%). Higher incremental yields on new loans at 11.6% indicate improvement in interest spreads going forward. Further, traction in developer loan disbursements (up 3x QoQ) bodes well for interest yields.
Maintain BUY with revised TP of Rs 324 (Rs 350 earlier)
We revise downwards our earnings estimates for FY13 and FY14 by 10% and 16% to factor in higher provisioning expenses. We continue to believe LICHF remains a secular play on India’s retail growth story, and is likely to benefit from: (a) improving margin led by re-pricing of teaser loan portfolio, (b) rising proportion of developer loans (~4% share), and (c) easing pressure on funding costs (bank funding share at 28% which gets repriced with decreasing base rates).
Maintain BUY with revised TP of Rs 324 (1.9x FY15E ABV) – upside of 28% from CMP of Rs 252. The stock trades at 1.7x FY14E ABV of Rs 150 and 1.5x FY15E ABV of Rs 171.
With our best regards,
Axis Direct Research
CA. Rajesh Desai
Rajesh Desai
| LIC Housing Finance tumbles on reporting 23% fall in Q3 net profit | |
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LIC Housing Finance has reported 22.72% fall in its net profit at Rs 236.24 crore for third quarter ended December 31, 2012 as compared to Rs 305.69 crore for the same quarter in the previous year. However, total income from operation of the company has increased by 22.76% at Rs 1954.96 crore for quarter under review as compared to Rs 1592.53 crore for the quarter ended December 31, 2011. LIC holds 40.31% stake in LIC Housing Finance while, institutional investors, both foreign and domestic together, are holding 41.47% shares, others hold 18.22% shares. | |
CA. Rajesh Desai
Rajesh Desai
LICHF: 3Q EPS of Rs4.7, -3% QoQ, -27% YoY, below expectations
LIC Housing’s (LICHF) EPS for 3Q was below our estimates primarily because of higher provisioning expenses than estimated by us.
• Loans at Rs727bn, +5% QoQ, +24% YoY
• Net interest income of Rs4.0bn, +4% QoQ, +11% YoY
• NIM at 2.1%, unchanged QoQ, -18bp YoY
• Other income of 0.2bn, ‐7% QoQ, -2% YoY
• Provisioning expenses of 0.3bn, +359% QoQ
• GNPA at 0.74%, +11bp YoY, NNPA at 0.45%, +15bp YoY
Comment: LICHF’s earnings disappointed on both operating and provisioning front. Despite increased loans to the high yielding developer segment (Rs5.0bn vs. Rs 1.2bn in 2QFY13), NIM remained unchanged QoQ. Provisioning expenses increased four-fold to Rs0.3bn. We will review our FY13F and FY14F EPS post the con-call scheduled today.
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CA. Rajesh Desai
Rajesh Desai
Antique
3QFY13 results review
LIC Housing Finance Limited - Margin expansion holds key to re-rating
LIC Housing Finance (LICHF) reported disappointing 3QFY13 earnings at INR2.36bn, substantially below consensus and our estimates of INR2.72bn, on account of weak operating matrix and higher provisioning expenses. While continued buoyancy in loan growth was the key positive, sharp deterioration in asset quality (linked to slippages in developer loan portfolio) and lower margins (vs. management guidance of margin expansion from 3Q onwards) were the key negatives that emerged during the quarter.
Valuation and outlook
In light of disappointing results and delayed expansion in NIMs, we are reducing our FY13e and FY14e estimates by 8% and 12%, respectively. While we do agree that margins for LICHF are at a cyclical low and will expand 4Q onwards, the expansion is still likely to be at significantly back ended. Hence, we would like to revisit our TP of 265/share and our HOLD recommendation once we have some better visibility on margin expansion.
Company update
CA. Rajesh Desai