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L o w e r d e v e l o p e r l o a n s i m p a c t m a r g i n s …
After excess provisions impacted Q2FY12 profits, the reversal of | 78.9
crore has brought profits back to normal levels. Profits surged 43% YoY
and 210% QoQ to | 306 crore (| 98 crore in Q2FY12) in line with estimate
of | 323 crore PAT factoring | 100 crore provision reversal.
Hence, the PCR declined from 81.6% to 51% sequentially. The core
performance was stable with the overall loan portfolio growing 26.6%
YoY and 5% QoQ to | 58707 crore. Non interest income also remained
subdued with 4.2% YoY and 6.2% QoQ dip to | 539 crore.
NII declined 7.5% YoY and 2.5% QoQ to | 325 crore slightly below
estimated | 352 crore as developer loans continue to decline (from 6%
now against 7.6% in Q1FY12) leading to NIMs decreasing by 18 bps to
2.27%. Management has maintained guidance of 2.7% NIM for FY13E.
ƒ Margins guided to increase as project loans share to rise from Q4…
Margins dipped to 2.27% from 2.45% sequentially and 3.14% YoY.
This is primarily because project loans share continued to dip from
7% to 6% QoQ and 10.5% YoY to | 3535 crore. It disbursed loans of
just | 154 crore to developers vs. | 4568 crore to the individual loans
segment. Hence, sequentially, yield on funds (calculated) remained
flat from 10.70% to 10.72% but cost of funds jumped from 9.25% to
9.40% leading to a sharp NIM cut of 18 bps to 2.27% from 2.45%.
Management indicated project loans will increase from Q4 and by
FY13 end it should form 9-10% of total portfolio leading to margin
improvement. Also, close to | 9000 crore of loans are going to get
converted from fixed to floating from FY13 adding fillip to margins.
We have lowered FY12E credit growth from ~23% to 21% YoY
while PAT growth has been revised downwards by 7% to | 990
crore. However, we have raised FY13E PAT to | 1280 crore from
| 1246 crore on account of positive NIM guidance.
V a l u a t i o n
LICHF has remained resilient in recent market correction and is currently
trading close to its 52-week high at 2x FY13E ABV, which seems fairly
valued. It has also taken approval for equity raising in the coming year.
With strong RoE and RoA of 23% and 1.7%, respectively, we have valued
the stock at 2x FY13E ABV to | 250 and recommend HOLD rating on it.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
L o w e r d e v e l o p e r l o a n s i m p a c t m a r g i n s …
After excess provisions impacted Q2FY12 profits, the reversal of | 78.9
crore has brought profits back to normal levels. Profits surged 43% YoY
and 210% QoQ to | 306 crore (| 98 crore in Q2FY12) in line with estimate
of | 323 crore PAT factoring | 100 crore provision reversal.
Hence, the PCR declined from 81.6% to 51% sequentially. The core
performance was stable with the overall loan portfolio growing 26.6%
YoY and 5% QoQ to | 58707 crore. Non interest income also remained
subdued with 4.2% YoY and 6.2% QoQ dip to | 539 crore.
NII declined 7.5% YoY and 2.5% QoQ to | 325 crore slightly below
estimated | 352 crore as developer loans continue to decline (from 6%
now against 7.6% in Q1FY12) leading to NIMs decreasing by 18 bps to
2.27%. Management has maintained guidance of 2.7% NIM for FY13E.
ƒ Margins guided to increase as project loans share to rise from Q4…
Margins dipped to 2.27% from 2.45% sequentially and 3.14% YoY.
This is primarily because project loans share continued to dip from
7% to 6% QoQ and 10.5% YoY to | 3535 crore. It disbursed loans of
just | 154 crore to developers vs. | 4568 crore to the individual loans
segment. Hence, sequentially, yield on funds (calculated) remained
flat from 10.70% to 10.72% but cost of funds jumped from 9.25% to
9.40% leading to a sharp NIM cut of 18 bps to 2.27% from 2.45%.
Management indicated project loans will increase from Q4 and by
FY13 end it should form 9-10% of total portfolio leading to margin
improvement. Also, close to | 9000 crore of loans are going to get
converted from fixed to floating from FY13 adding fillip to margins.
We have lowered FY12E credit growth from ~23% to 21% YoY
while PAT growth has been revised downwards by 7% to | 990
crore. However, we have raised FY13E PAT to | 1280 crore from
| 1246 crore on account of positive NIM guidance.
V a l u a t i o n
LICHF has remained resilient in recent market correction and is currently
trading close to its 52-week high at 2x FY13E ABV, which seems fairly
valued. It has also taken approval for equity raising in the coming year.
With strong RoE and RoA of 23% and 1.7%, respectively, we have valued
the stock at 2x FY13E ABV to | 250 and recommend HOLD rating on it.
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