Visit http://indiaer.blogspot.com/ for complete details LIC Housing Finance: Strong Growth Trends Continue
and 37% YoY). Our estimate was Rs2.16 bn.
The following were the key points from the results:
a) Volumes remained strong with loan book growing
8% QoQ and 36% YoY. This compares with 5%
QoQ and 37% YoY in the previous quarter.
b) Margins contracted by 8 bps QoQ to 2.93% – in line
with expectations. Management indicated that the
PLR hike of 50 bps effected on October 1 will
provide a buffer against funding cost increases and
will help maintain margins between 2.8-2.9% for the
rest of the year. (We project margins to compress to
2.8% by end-F2011 and 2.7% in F2012.)
c) Non-interest income picked up owing to processing
on new loan disbursements.
d) Cost:income ratio moved up from the previous
quarter’s low level of 11.3% to 13.6%. The key
driver here was an increase in commissions paid on
fresh loan disbursements.
e) Asset quality trends registered improvement with
GNPLs falling 13% QoQ / 22% YoY. As a result,
provisions during the quarter were negligible.
LICHF is trading at 12.7x F12e earnings and 2.8x BV.
We believe these valuations are attractive, since loan
growth – the key catalyst for the stock – is likely to
remain strong. With expectations of QE2 increasing and
capital flows to India strengthening, we believe that
funding costs may be capped even as growth remains
strong – hence, LICHF could be heading for a sweet
spot.
No comments:
Post a Comment