Visit http://indiaer.blogspot.com/ for complete details Results in line, growth targets robust…
A strong 8% sequential jump in advances by LICHF shows that the
home loan segment is seeing good volume surge in the industry. This
led to a 63% jump in NII to Rs 305 crore in line with expectations. NIM
continued its slide QoQ at 2.93% from 3.01% in Q1FY11. We expect NIM
to stay close to 2.8% over FY10-FY12E. The PAT grew 37% YoY to Rs
234 crore slightly above our estimate on account of lower provisions.
We estimate that PAT will grow at 24% CAGR over FY10-12E.
Credit growth robust, Q2 developer loans disbursement - higher…
The loan book continues to be skewed in favour of retail assets
where the individual loan book comprised 88.7% and project loans
(developers, etc) are at 11.3% of total loan book, which rose 36%
YoY to Rs 43385 crore. However, in Q2FY11, developer loans have
seen incremental disbursements forming 21% of the incremental
loan book of about Rs 6,000 crore. Sanctions and disbursements
surged 36% and 43% YoY, respectively. Considering the strong
credit numbers, we have revised our growth estimate of FY11 and
FY12E to 28% and 22%, respectively, taking the book size to Rs
48,743 crore in FY11E and Rs 59,573 crore in FY12E. Accordingly,
NII and PAT have also been revised upwards.
Clean asset book and strong return ratios maintained
GNPA and NNPA remained under control at 0.74% and 0.21%,
respectively. With substantial portion of loans being retail, we do not
expect any major spike in NPAs. Return ratios continue to be high
with RoE at around 24% and RoA at around 2.19% for the quarter.
We believe RoE over 20% and RoA over 1.8-2% are sustainable.
Higher return ratios of over 20% RoE and 1.8-2% of RoA led to
considerable premium over BV. Now, the buzz on the banking licence is
an added trigger. We expect LICHF to maintain its asset quality and
growth momentum. Hence, we value the stock at 2.8x its FY12 ABV to
arrive at a target price of Rs 1506 (including Rs 19 from LIC Mutual Fund).
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