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LIC HOUSING FINANCE LTD
PRICE: RS.220 RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.240 FY13E P/E: 8.5X; P/ABV: 1.9X
Q2FY12: NIM disappointed, likely to improve in H2FY12. Net Income
was pulled down by additional standard asset provisions.
q NII grew at moderate pace (9.5% YoY) on back of lower NIM (2.45% in
Q2FY12; contraction of 48bps) despite 29.3% growth in loans book. NIM
disappointed during Q2FY12, however, likely to improve in H2FY12 as
50bps rise in lending rates (Q2FY12) would start reflecting in interest income.
Net Income was down by 58.0% YoY mainly on back of huge provisions
(Rs.2.05 bn) done on standard assets to meet the recent NHB regulations.
q Disbursements picked-up (45.2% QoQ) during Q2FY12; Individual disbursements
grew at healthy pace (24.0% YoY) during Q2FY12 as compared
to 14.9% witnessed in the previous quarter. Although, developer
lending grew at moderate pace (8.0% YoY) during Q2FY12, it was better
than the previous quarter (2.2% YoY).
q Asset quality improved during Q2FY12 after rising sharply during last
quarter (seasonal phenomena!!). In absolute terms, gross NPA and net
NPA declined 19% and 64%, respectively. In percentage terms, both gross
as well as net NPAs declined to 0.64% and 0.12%, respectively.
q At the CMP, stock is trading at 1.9x its FY13E ABV and 8.5x its FY13E
earnings. We have tweaked earnings estimate downward for FY12E to
factor-in higher provisions done during Q2FY12. With limited upside
from current levels, we maintain the ACCUMULATE rating on the stock
with unchanged TP of Rs.240 based on 2.0x its FY13 ABV.
NIM disappointed, however, likely to improve in H2FY12; net Income
was pulled down by additional standard asset provisions.
NII grew at moderate pace (9.5% YoY) on back of lower NIM (2.45% in Q2FY12;
contraction of 48bps) despite 29.3% growth in loans book. NIM disappointed during
Q2FY12, however, likely to improve in H2FY12 as 50bps rise in lending rates
(Q2FY12) would start reflecting in interest income.
Net Income was down by 58.0% YoY mainly on back of huge provisions (Rs.2.05
bn) done on standard assets. NHB has asked all HFCs to provide 40bps as standard
asset provisions on retail loans in line with banks. Although LIC Housing Finance had
floating provisions of Rs.1.1 bn, it chose not to utilize this for meeting the recent
NHB regulations.
Disbursements picked-up during Q2FY12; although loan book
grew at 29.3% during Q2FY12, we are assuming moderate
growth of 20% during FY12E.
Disbursements picked-up (45.2% QoQ) during Q2FY12. Individual disbursements
grew at healthy pace (24.0% YoY) during Q2FY12 as compared to 14.9% witnessed
in the previous quarter. Although, developer lending grew at moderate pace (8.0%
YoY) during Q2FY12, it was better than the previous quarter (2.2% YoY). Moderate
growth in developer loans is on the back of cautious stance of management on this
segment.
Although outstanding mortgage portfolio rose 29.3% (YoY) at the end of Q2FY12,
we are assuming moderate loan growth of 20% during FY12E as there has been
some indication of sluggishness in the real estate transactions.
Asset quality improved during Q2FY12 after rising sharply during
last quarter
Asset quality improved during Q2FY12 after rising sharply during last quarter (seasonal
phenomena!!). In absolute terms, gross NPA and net NPA declined 19% and
64%, respectively.
In percentage terms, both gross as well as net NPAs declined to 0.64% and 0.12%,
respectively. LICHF has been showing seasonal trend in the asset quality with Q1
showing higher NPAs with improvement in subsequent quarters.
Valuation and recommendation
At the CMP, stock is trading at 1.9x its FY13E ABV and 8.5x its FY13E earnings. We
have tweaked earnings estimate downward for FY12E to factor-in higher provisions
done during Q2FY12. We expect earnings growth of 12.5% CAGR during FY11-13E;
while FY12 net income is forecasted to come down by ~6%, FY13E is likely to witness
robust earnings growth (low base). We expect EPS and ABV to come at Rs.25.9
and Rs.117.0, respectively, during FY13E.
With limited upside from current levels, we maintain the ACCUMULATE rating on
the stock with unchanged TP of Rs.240 based on 2.0x its FY13 ABV.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
LIC HOUSING FINANCE LTD
PRICE: RS.220 RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.240 FY13E P/E: 8.5X; P/ABV: 1.9X
Q2FY12: NIM disappointed, likely to improve in H2FY12. Net Income
was pulled down by additional standard asset provisions.
q NII grew at moderate pace (9.5% YoY) on back of lower NIM (2.45% in
Q2FY12; contraction of 48bps) despite 29.3% growth in loans book. NIM
disappointed during Q2FY12, however, likely to improve in H2FY12 as
50bps rise in lending rates (Q2FY12) would start reflecting in interest income.
Net Income was down by 58.0% YoY mainly on back of huge provisions
(Rs.2.05 bn) done on standard assets to meet the recent NHB regulations.
q Disbursements picked-up (45.2% QoQ) during Q2FY12; Individual disbursements
grew at healthy pace (24.0% YoY) during Q2FY12 as compared
to 14.9% witnessed in the previous quarter. Although, developer
lending grew at moderate pace (8.0% YoY) during Q2FY12, it was better
than the previous quarter (2.2% YoY).
q Asset quality improved during Q2FY12 after rising sharply during last
quarter (seasonal phenomena!!). In absolute terms, gross NPA and net
NPA declined 19% and 64%, respectively. In percentage terms, both gross
as well as net NPAs declined to 0.64% and 0.12%, respectively.
q At the CMP, stock is trading at 1.9x its FY13E ABV and 8.5x its FY13E
earnings. We have tweaked earnings estimate downward for FY12E to
factor-in higher provisions done during Q2FY12. With limited upside
from current levels, we maintain the ACCUMULATE rating on the stock
with unchanged TP of Rs.240 based on 2.0x its FY13 ABV.
NIM disappointed, however, likely to improve in H2FY12; net Income
was pulled down by additional standard asset provisions.
NII grew at moderate pace (9.5% YoY) on back of lower NIM (2.45% in Q2FY12;
contraction of 48bps) despite 29.3% growth in loans book. NIM disappointed during
Q2FY12, however, likely to improve in H2FY12 as 50bps rise in lending rates
(Q2FY12) would start reflecting in interest income.
Net Income was down by 58.0% YoY mainly on back of huge provisions (Rs.2.05
bn) done on standard assets. NHB has asked all HFCs to provide 40bps as standard
asset provisions on retail loans in line with banks. Although LIC Housing Finance had
floating provisions of Rs.1.1 bn, it chose not to utilize this for meeting the recent
NHB regulations.
Disbursements picked-up during Q2FY12; although loan book
grew at 29.3% during Q2FY12, we are assuming moderate
growth of 20% during FY12E.
Disbursements picked-up (45.2% QoQ) during Q2FY12. Individual disbursements
grew at healthy pace (24.0% YoY) during Q2FY12 as compared to 14.9% witnessed
in the previous quarter. Although, developer lending grew at moderate pace (8.0%
YoY) during Q2FY12, it was better than the previous quarter (2.2% YoY). Moderate
growth in developer loans is on the back of cautious stance of management on this
segment.
Although outstanding mortgage portfolio rose 29.3% (YoY) at the end of Q2FY12,
we are assuming moderate loan growth of 20% during FY12E as there has been
some indication of sluggishness in the real estate transactions.
Asset quality improved during Q2FY12 after rising sharply during
last quarter
Asset quality improved during Q2FY12 after rising sharply during last quarter (seasonal
phenomena!!). In absolute terms, gross NPA and net NPA declined 19% and
64%, respectively.
In percentage terms, both gross as well as net NPAs declined to 0.64% and 0.12%,
respectively. LICHF has been showing seasonal trend in the asset quality with Q1
showing higher NPAs with improvement in subsequent quarters.
Valuation and recommendation
At the CMP, stock is trading at 1.9x its FY13E ABV and 8.5x its FY13E earnings. We
have tweaked earnings estimate downward for FY12E to factor-in higher provisions
done during Q2FY12. We expect earnings growth of 12.5% CAGR during FY11-13E;
while FY12 net income is forecasted to come down by ~6%, FY13E is likely to witness
robust earnings growth (low base). We expect EPS and ABV to come at Rs.25.9
and Rs.117.0, respectively, during FY13E.
With limited upside from current levels, we maintain the ACCUMULATE rating on
the stock with unchanged TP of Rs.240 based on 2.0x its FY13 ABV.
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