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S h r i n k i n g p r o j e c t l o a n s , h i g h e r i n t e r e s t c o s t s
d e p r e s s N I M s …
Profits grew 20% YoY to | 256 crore, lower than our estimated | 301
crore. Interest costs surged pushing NII lower to just | 361 crore, growing
22% YoY. Even a dip in project loans from 8.5% to 7.6% sequentially led
to yields rising lower than expected. Credit growth remained robust at
32% YoY to | 52876 crore, in line with our estimates. We have decreased
our NII and hence profit estimates by 8-10% for both FY12E and FY13E.
Incremental high loan growth only from individuals shrinks margins…
In the last three quarters, the project loans book has declined by 18%
from | 4896 crore to | 4025 crore. We believe the full impact of declining
high yielding assets took place in Q1FY12.
Also, with rising interest rates and nearly 55% floating liabilities, the
calculated cost of funds went up from 7.74% in Q4FY11 to 8.49% in
Q1FY12. Yields on advances went marginally up from 10.13% to 10.27%
only over the same period leading to NIMs declining to 2.78% from
3.45% sequentially and 3.01% on a YoY basis. Some derecognition of
interest income on retail loans has also led to lower NII.
We expect loan growth to remain healthy at 24-25% for the next two
years but NII growth will taper down to 21% YoY growth as the project
loans mix declines from over 10% to <8% gradually.
Sequential NPA accretion slightly higher than annual phenomenon...
Provision has been higher at | 33 crore against an estimated | 20 crore.
As per annual seasonal phenomenon, Q1FY12 GNPA increased QoQ to
0.84% (| 444 crore) from 0.47% (| 242 crore). NNPA ratio was maintained
YoY at 0.35% (| 184 crore) but rose sequentially from 0.03%. No major
slippages are seen in the quarter. We expect the same to continue.
V a l u a t i o n
With revised estimates of profitability, FY13E ABV has corrected from |
140 to | 133 leading to our target price revision to | 242 from | 262
earlier. At current price of | 214, LICHF is trading at 1.6x FY13E ABV that
remains attractive as forward RoA of 2% and RoE of 25% still hold true.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
S h r i n k i n g p r o j e c t l o a n s , h i g h e r i n t e r e s t c o s t s
d e p r e s s N I M s …
Profits grew 20% YoY to | 256 crore, lower than our estimated | 301
crore. Interest costs surged pushing NII lower to just | 361 crore, growing
22% YoY. Even a dip in project loans from 8.5% to 7.6% sequentially led
to yields rising lower than expected. Credit growth remained robust at
32% YoY to | 52876 crore, in line with our estimates. We have decreased
our NII and hence profit estimates by 8-10% for both FY12E and FY13E.
Incremental high loan growth only from individuals shrinks margins…
In the last three quarters, the project loans book has declined by 18%
from | 4896 crore to | 4025 crore. We believe the full impact of declining
high yielding assets took place in Q1FY12.
Also, with rising interest rates and nearly 55% floating liabilities, the
calculated cost of funds went up from 7.74% in Q4FY11 to 8.49% in
Q1FY12. Yields on advances went marginally up from 10.13% to 10.27%
only over the same period leading to NIMs declining to 2.78% from
3.45% sequentially and 3.01% on a YoY basis. Some derecognition of
interest income on retail loans has also led to lower NII.
We expect loan growth to remain healthy at 24-25% for the next two
years but NII growth will taper down to 21% YoY growth as the project
loans mix declines from over 10% to <8% gradually.
Sequential NPA accretion slightly higher than annual phenomenon...
Provision has been higher at | 33 crore against an estimated | 20 crore.
As per annual seasonal phenomenon, Q1FY12 GNPA increased QoQ to
0.84% (| 444 crore) from 0.47% (| 242 crore). NNPA ratio was maintained
YoY at 0.35% (| 184 crore) but rose sequentially from 0.03%. No major
slippages are seen in the quarter. We expect the same to continue.
V a l u a t i o n
With revised estimates of profitability, FY13E ABV has corrected from |
140 to | 133 leading to our target price revision to | 242 from | 262
earlier. At current price of | 214, LICHF is trading at 1.6x FY13E ABV that
remains attractive as forward RoA of 2% and RoE of 25% still hold true.
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