Tag: LIC Housing

LIC Housing Finance falls over 12% after weak show but management optimistic about Q3

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of LIC Housing Finance slumped as much as 12.8 percent on Wednesday, a day after the company announced a 23 percent year-on-year growth in net profit at Rs 305 crore for the September quarter.

Though net profit was up, the key profitability metric, net interest margin — the difference between what it earns from lending and what it spends in cost of funds — stood at 1.80 percent, down from 2 percent a year ago. The NIM declined 2.54 percent quarter-on-quarter. Its net interest income, as well as individual loan disbursements, declined.

But Y Viswanatha Gowd, MD & CEO of LIC Housing Finance, told CNBC-TV18 in an interaction that the net interest margin would see improvement in the coming quarters. “We are confident that in the quarters to come, there will definitely be revenue improvement beyond what we have planned,” he said.

Gowd also said that the company was very sure and confident of achieving 15 percent growth in the loan book for FY23.

“Quarter three, we were very optimistic with all the targets set for the people down the line for our disbursements and the recovery. I am very sure that the results for the quarter three should be far, far better than the current one on all fronts,” he said.

Also Read: Karnataka Bank shares at 52-week high after best single-day gain in 17 years

The net interest income of the subsidiary of the country’s largest insurer, LIC, declined marginally by 0.4 percent year-on-year in the September quarter to Rs 1,12.9 crore but was down 27.8 percent quarter-on-quarter.

Here is a look at the firm’s loan disbursements:

The company said its provisions rose to Rs 6,522 crore on an expected credit loss basis and provision coverage ratio at 44 percent for stage three accounts as against Rs 5,355 crore in September 2021.

The stage three exposure on default declined to 4.9 percent from 5.1 percent in September 2021 and almost five percent in June 2022.

The firm’s shares were trading 9.5 percent lower on BSE at Rs 362.4 at 11:04 am.

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With inputs from PTI

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Jefferies finds this mortgage firm better placed amid rising interest rates

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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[wealthdesk shortname=”LIC Housing Fin” isinid=”INE115A01026″ bseid=”500253″ nseid=”LICHSGFIN” sector=”Finance – Housing” exchange=”nse”]

India’s second-largest housing finance company, LIC Housing Finance, is better placed as the global economy is going through an interest rate hike cycle, according to brokerage firm Jefferies. The brokerage maintained its “buy” recommendation on the company and raised its price target to Rs 510 from Rs 450, citing attractive valuations for the company. The revised price target is a 20 percent upside from Wednesday’s closing levels.

LIC Housing Finance has an outstanding loan book of Rs 2.52 lakh crore as of March 2022 with over 30 lakh customers. Life Insurance Corporation of India (LIC) is the company’s promoter and holds a 45 percent stake in the housing finance lender. The promoter infused a sum of Rs 2,335.5 crore in its subsidiary during the previous financial year.

The company also raised rates for new and existing home loans by 125 and 110 basis points respectively, including a 50 basis points hike last month. Jefferies expects an increase in the company’s portfolio spread, driven by 96 percent floating rate loans and 51 percent fixed rate liabilities, which in turn will aid overall spreads. It anticipates a 6 percent increase in the company’s Earnings Per Share with every 10 basis points rise in spreads.

In common terms, a spread is defined as the price a borrower pays above a benchmark yield to get a loan.

Jefferies anticipates 13 percent compounded growth over FY22-25 due to tepid growth in the Loan Against Property (LAP) book and a marginal decline in the developer book.

The company expects asset quality to improve in FY23 with Gross Stage 3 assets seen in the 3.2 percent to 3.5 percent range from 3.6 percent to 3.8 percent in FY22. With asset quality in retail housing stabilising, Jefferies anticipates incremental stress to moderate. However, Jefferies expects slippages in its wholesale book, especially the restructured one. It also projects credit costs to fall by 44 basis points over the next three years. “A 500 basis points change in wholesale NPA would impact credit costs by 15 basis points and book value by four percent,” the note said.

Other Key Takeaways:

• Expect compounded EPS growth of 26 percent and Return on Equity of 13.5 percent to 14.5 percent over FY22-25
• Higher spreads could support better valuations multiple
• Should benefit from strong housing momentum in housing demand

Shares of LIC Housing Finance trade 0.6 percent higher at Rs 423.15. The stock is 8 percent away from its 52-week high.

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Federal Bank, TVS Motor, LIC Housing, Asian Paints and more: Stocks that moved the most on Oct 22

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bullish on LIC Housing, Ujjivan; book profits in bulk drug firms: Centrum’s Maheshwari

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Any correction in the market is a good opportunity to buy financials, says Nischal Maheshwari of Centrum Broking.

“There is a pause basically, given that there is some correction happening in the market I think these are all buying opportunity as far as financials are concerned,” Maheshwari told CNBC-TV18.

“There is some amount of profit taking which we are seeing, so these should be used to buy all these large banks. I believe that quality smallcap banks also should be looked at and some of the NBFCs also, but quality names,” he said.

Maheshwari said he is bullish on stocks like LIC Housing Finance and Ujjivan Financial Services.

He recommends booking profits in bulk drug stocks like Laurus Labs and Granules India, which have risen sharply over the past few months.

“Companies who have been big on the API (active pharmaceutical ingredients) side may not have the same kind of numbers basically which they have shown in the last two quarters because as we get out of these pandemic the hoarding which most of us have done basically of medicines, and that is what has led to record sales for these people, I think that is not going to happen in the next coming years. So you are not going to see same kind of growth what we saw in the last two quarters and for FY21.”

He added, “At these prices one should be taking away some profits from these stocks.”

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow