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Prabhudas Lilladher
LIC Housing (Accumulate)
CMP: ₹530.35
Target: ₹645
LIC Housing Finance’s net earnings of ₹499 crore were in-line with our estimates with strong NII growth of 22.6 per cent y-o-y at ₹915 crore ) but was offset by lower fee income (down 45 per cent q-o-q).
Overall loan book grew at 15.3 per cent y-o-y, but growth was mainly led by developer book (45 per cent y-o-y) and loan against property book (87 per cent y-o-y). Core retail book growth continues to be slow at 9.4 per cent y-o-y. Competitive landscape continues to be tough with all asset financiers getting into faster interest rate cuts, while cost repricing has been gradual which will keep spreads steady.
Asset quality remained stable with both GNPAs & NNPAs down 1 bps q-o-q.
Valuations of 2.1x FY18E & 1.7x FY19E remains at reasonable level, but core retail book continues to struggle with risk of repricing at lower levels.
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