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Strong all-round performance
Q4FY11 proved to be yet another strong quarter for LICHF. NII grew by 20% QoQ
(41% YoY) led by strong business growth and a further 31bps improvement in
NIMs. Total disbursements in the individual segment grew 38% YoY (adjusted for a
home loan portfolio of Rs 12.5bn bought from LIC); however, disbursements to the
project segment were lower YoY. Asset quality improved with GNPA/NNPA
declining from 0.67%/0.18% in Q3FY11 to 0.47%/0.03% in Q4FY11. The stock is
currently trading at 2.2x FY12BV/10x FY12E. We remain bullish on the stock
despite its strong outperformance in the last 3–4 months, as earnings growth would
likely remain strong at 16% CAGR over FY11–FY13 driven by continued traction in
business growth. LICHF remains among our top picks in the NBFC space. Maintain
BUY with a target price of Rs 260 per share (2.5x FY12 BV and 11.7x FY12 EPS).
Growth momentum continues: LICHF bought a loan portfolio of Rs 12.5bn from
LIC, adjusted for which disbursements/loan book in the individual segment grew
38%/34% YoY. Developer disbursements, however, were lower 10% QoQ to
Rs 43.6bn due to a sharp decline in incremental disbursements (Fig 3) and higher
repayments. This lowered the proportion of the developer loan portfolio to 8.5%.
However, we expect developer disbursements to pick up in the coming quarters. We
are factoring in a 23/27% CAGR in the disbursement/loan book over FY11–FY13E.
NIMs surprise positively: NIMs improved 31bps QoQ to 3.45% (vs. our
expectation of a ~30bps decline). This was supported by a ~27bps QoQ improvement
in yield on assets. Costs of funds remained largely stable QoQ. For the full year,
reported NIMs improved by 38bps YoY to 3.08%. We are factoring in a 43bps
decline in NIMs through FY13 due to a sharp increase in wholesale rates.
Asset quality healthy: Gross NPA improved QoQ (in line with the historical trend)
to 0.47% (Fig 6). Total provision coverage improved from 73% in Q3FY11 to 94%
in Q4FY11. LICHF has made a provision of Rs 2.6bn towards its three-year dual rate
home loan scheme in FY11. However, it has not made any provision towards its
Advantage 5 portfolio yet (total loan portfolio stood at ~Rs 90bn).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Strong all-round performance
Q4FY11 proved to be yet another strong quarter for LICHF. NII grew by 20% QoQ
(41% YoY) led by strong business growth and a further 31bps improvement in
NIMs. Total disbursements in the individual segment grew 38% YoY (adjusted for a
home loan portfolio of Rs 12.5bn bought from LIC); however, disbursements to the
project segment were lower YoY. Asset quality improved with GNPA/NNPA
declining from 0.67%/0.18% in Q3FY11 to 0.47%/0.03% in Q4FY11. The stock is
currently trading at 2.2x FY12BV/10x FY12E. We remain bullish on the stock
despite its strong outperformance in the last 3–4 months, as earnings growth would
likely remain strong at 16% CAGR over FY11–FY13 driven by continued traction in
business growth. LICHF remains among our top picks in the NBFC space. Maintain
BUY with a target price of Rs 260 per share (2.5x FY12 BV and 11.7x FY12 EPS).
Growth momentum continues: LICHF bought a loan portfolio of Rs 12.5bn from
LIC, adjusted for which disbursements/loan book in the individual segment grew
38%/34% YoY. Developer disbursements, however, were lower 10% QoQ to
Rs 43.6bn due to a sharp decline in incremental disbursements (Fig 3) and higher
repayments. This lowered the proportion of the developer loan portfolio to 8.5%.
However, we expect developer disbursements to pick up in the coming quarters. We
are factoring in a 23/27% CAGR in the disbursement/loan book over FY11–FY13E.
NIMs surprise positively: NIMs improved 31bps QoQ to 3.45% (vs. our
expectation of a ~30bps decline). This was supported by a ~27bps QoQ improvement
in yield on assets. Costs of funds remained largely stable QoQ. For the full year,
reported NIMs improved by 38bps YoY to 3.08%. We are factoring in a 43bps
decline in NIMs through FY13 due to a sharp increase in wholesale rates.
Asset quality healthy: Gross NPA improved QoQ (in line with the historical trend)
to 0.47% (Fig 6). Total provision coverage improved from 73% in Q3FY11 to 94%
in Q4FY11. LICHF has made a provision of Rs 2.6bn towards its three-year dual rate
home loan scheme in FY11. However, it has not made any provision towards its
Advantage 5 portfolio yet (total loan portfolio stood at ~Rs 90bn).
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