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Prabhudas Lilladher
LIC Housing (Accumulate)
CMP: ₹543
Target: ₹649
LIC Housing Finance Ltd is engaged in the housing finance business. The company provides loans for purchase, construction, repairs and renovation of houses/flats to individuals, corporate bodies, builders and co-operative housing societies.
LIC Housing Finance reported muted performance with earnings of ₹540 crore in-line with estimates (PLe: ₹542 crore) on the back of weak net interest income (NII) growth as loan growth was slightly slower and margin pick-up being lower than expected.
Core retail disbursement and loan growth was a tad better but was muted on LAP (loan against property), while developer disbursement and loan growth were strong. Asset quality improved sequentially on the back of seasonlly better retail book.
Loan growth were below industry trend and muted spreads will keep NII growth lower than historical trends, however, we do not expect any large asset quality issues leading it to deliver 17-17.5 per cent ROE over FY19-20E. Retain Accumulate with revised price target of ₹649 (down from ₹667) based on 2.0x Mar-20 ABV.
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