LIC Housing Finance Ltd.|Q2FY15 Result/Concall Update | Inline with expectation, asset quality improved… maintain buy with target price of Rs 380 :: IndiaNivesh

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LIC housing finance’s Q2FY15 results were inline with expectation on all fronts
with NII increase of 17% yoy to Rs 5.3 bn led by 17% yoy growth in Loan book to Rs
975 bn. Individual loan book grew by 18% yoy (5% qoq) to Rs 951 bn while project
loan was down by 5% yoy to Rs 24 bn. NIMs were stable and inline with expectation
at 2.2%. Asset quality improved on qoq basis by 18 / 15 bps qoq to 0.63% / 0.33%.
Operating profit was inline with expectation at Rs 4.97, up 9% yoy. Despite
provision write back of Rs 190 mn, Net profit was inline with expectation at Rs 3.4
bn mainly due to deferred tax liability of Rs 3 bn. Current valuation of 1.7x ABV
for FY16E looks reasonable with stable ROEs of 17-18%. Maintain buy with target
price of Rs 380, valuing at 2x FY16E ABV.
Result highlights:
Individual Loan continues to drive loan book:
Loan book of LIC housing finance grew by 17% yoy which is inline with our
expectation with individual loan book growth of 18% yoy and project loan down by
5% yoy. Individual loan book constitutes 93.5% to loan book, LAP is 4% and Project
loan at 2.5%. Total sanctions for Q2FY15 grew by 25% yoy to Rs 80.9 bn while
Disbursements grew by 21% yoy to Rs 72 bn. In Loan Against Property (LAP), it has
disbursed Rs 4.4 bn in Q2FY15 as against ~Rs 2 bn in Q2FY14 and ~Rs 3.8 bn in
Q1FY15. In project loans, it has disbursed ~Rs 1.5 bn for Q2FY15. Management is
targeting for loan growth of 20% yoy as against our expectation of 18% CAGR for
FY14-16E. Further the company has strong pipeline of sanctions of Rs 7.7 bn in
project loan segment which is likely to be disbursed in H2FY15.

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