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Another lightning quarter beats estimates…
LIC Housing Finance (LICHF) reported another strong quarter with a 47%
surge in PAT both in Q4 and full year FY11. Our estimates were beaten by
a substantial margin of 20% as we expected PAT of | 253 crore for Q4
whereas it reported | 315 crore mainly due to NII of | 420 crore, surging
up 41% YoY and lower provisions. Credit growth remained strong at 34%
YoY to | 51090 crore, in line with our estimates. Sequentially, NIMs have
surprised improving to 3.45% from 3.14%. We have introduced our
FY13E in this quarter. With strong earnings consistency, we expect NII to
post 28% CAGR and PAT to post 28% CAGR over FY11-13E.
Loan growth high at 34% with annual NIM of 3.08%
With individual sanctions and disbursements rising over 40% y-o-y, going
forward the share of the same is expected to go up. Currently, these loans
form 91.5% of the loan book up from 89.5% both y-o-y and q-o-q. Overall
50% of the loans are on floating basis giving adequate space for NIM
management. The reported yield on advances has gone up by 42bps to
10.62% on y-o-y basis while cost of funds have risen by 43bps to 8.01%
leading to spreads remaining flat at 2.6%. NIM went up even in Q4 by 31
bps to 3.45%. We expect an improvement in NIM in FY12E as housing
loan rates have still not increased fully. We believe, with larger proportion
of less risky retail home loan portfolio, margins are likely to be
mainatained around 3% and loan growth to be strong at 24% CAGR.
Past issues left behind, asset quality does not seem jittery…
As per the annual phenomenon, Q4FY11 GNPA declined QoQ to 0.47% (|
242 crore) from 0.67% (| 313 crore). Even NNPA was down to just | 15
crore i.e. 0.03% only. Provision has been on the lower side at just |18.8
crore for the quarter as the NHB mandated provision was made in
Q3FY11 but full year FY11 has already seen provisioning rising
substantially to around | 260 crore from a write back in FY10.
Valuation
At the CMP of | 225, LICHF is trading at 1.6x FY13E ABV, which is quite
attractive as forward RoA of over 2% and RoE of ~ 25% does command a
premium. We have revised our PAT estimates upwards for FY12E. Rolling
to FY13E ABV of |142, we value the stock at 1.8x. Ascribing | 2 for LIC
AMC, we have increased our SOTP target price to | 262.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Another lightning quarter beats estimates…
LIC Housing Finance (LICHF) reported another strong quarter with a 47%
surge in PAT both in Q4 and full year FY11. Our estimates were beaten by
a substantial margin of 20% as we expected PAT of | 253 crore for Q4
whereas it reported | 315 crore mainly due to NII of | 420 crore, surging
up 41% YoY and lower provisions. Credit growth remained strong at 34%
YoY to | 51090 crore, in line with our estimates. Sequentially, NIMs have
surprised improving to 3.45% from 3.14%. We have introduced our
FY13E in this quarter. With strong earnings consistency, we expect NII to
post 28% CAGR and PAT to post 28% CAGR over FY11-13E.
Loan growth high at 34% with annual NIM of 3.08%
With individual sanctions and disbursements rising over 40% y-o-y, going
forward the share of the same is expected to go up. Currently, these loans
form 91.5% of the loan book up from 89.5% both y-o-y and q-o-q. Overall
50% of the loans are on floating basis giving adequate space for NIM
management. The reported yield on advances has gone up by 42bps to
10.62% on y-o-y basis while cost of funds have risen by 43bps to 8.01%
leading to spreads remaining flat at 2.6%. NIM went up even in Q4 by 31
bps to 3.45%. We expect an improvement in NIM in FY12E as housing
loan rates have still not increased fully. We believe, with larger proportion
of less risky retail home loan portfolio, margins are likely to be
mainatained around 3% and loan growth to be strong at 24% CAGR.
Past issues left behind, asset quality does not seem jittery…
As per the annual phenomenon, Q4FY11 GNPA declined QoQ to 0.47% (|
242 crore) from 0.67% (| 313 crore). Even NNPA was down to just | 15
crore i.e. 0.03% only. Provision has been on the lower side at just |18.8
crore for the quarter as the NHB mandated provision was made in
Q3FY11 but full year FY11 has already seen provisioning rising
substantially to around | 260 crore from a write back in FY10.
Valuation
At the CMP of | 225, LICHF is trading at 1.6x FY13E ABV, which is quite
attractive as forward RoA of over 2% and RoE of ~ 25% does command a
premium. We have revised our PAT estimates upwards for FY12E. Rolling
to FY13E ABV of |142, we value the stock at 1.8x. Ascribing | 2 for LIC
AMC, we have increased our SOTP target price to | 262.
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