Nirmal Bang

LIC Housing (Buy)

CMP: Rs 268.85

Target: Rs 333

LIC Housing Finance Ltd (LICHF) is one of the largest housing finance company in India promoted by LIC. The main objective of the company is to provide long term finance to individuals for purchase/ reconstruction of new/ existing flats. We are positive on the company owing to the fundamental improvement in earnings from FY13E onwards benefiting from re-pricing and higher developer-loan build up. We expect net profit to grow at 30.8 per cent CAGR over FY12-14E. Driven by strong disbursement and focus on asset quality LIC Housing is well positioned to deliver sustainable and profitable growth. We believe that the current valuations of 2.02x FY13E and 1.69x FY14E BV are attractive.

Arihant Capital

IndusInd Bank (Accumulate)

CMP: Rs 314.20

Target: Rs 385

Indusind Bank (IIB) posted healthy profitability with whopping 35 per cent growth y-o-y driven by strong core income and robust non- interest income performance. While the loan book grew at healthy pace too, the asset quality demonstrated good show with no restructuring during the quarter. However, tightened spreads and not so encouraging CASA momentum offset the robust top-line performance. In our opinion, clearly the earnings visibility stands captured in the valuations and hence we do not expect a major surprise to follow. Furthermore, two key factors to be watched out for this year for IIB that would remain as overhang on the stock momentum are — firstly, the capital raising plans, i.e., the form and timing of capital raise and in turn the likely to impact on RoEs, and secondly, the dilution (form of dilution, i.e., through primary issuance or a stake sale to a strategic partner) in promoter stake by the set deadline of December.

(This article was published on July 11, 2012)
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