LIC Housing Finance Co (Q3 FY13)

India Infoline News Service | Mumbai |

We retain BUY rating on LIC HF with 9-month target of Rs294.

CMP Rs248, Target Rs294, Upside 18.5%
  • Loan disbursements grew by robust 27% yoy; individual loan disbursements continue to grow strongly by 21% yoy and project loan disbursements were up 220% yoy. The share of project loans in overall disbursements stood at a multi-quarter high of 8.3%. As guided by the management, project loan approvals picked up with the company sanctioning about Rs10bn in Q3 FY13 and likely to sanction Rs12bn during Q4. Outstanding mortgage portfolio grew by brisk 24% yoy; company expects the book to grow by 20%+ in FY14 notwithstanding intensifying competition. The share of project loans is likely to increase to 5% in the medium term.
  • NII growth was muted at 6% yoy with NIM being lower by 18bps (was stable on qoq basis). During the quarter, there was 6-7cr of interest reversal due to substantial slippages in project loan book. In 9m FY13, around Rs50bn of Fix-o-Floaty loans were re-priced at higher rates. NIM has been guided at 2.2% in Q4 aided by upward re-pricing of Fix-o-Floaty loans worth ~Rs25bn and softening of funding rate. Weighted average cost of NCDs is declining but at a gradual pace; 90bn worth of NCDs would be re-priced in FY14 at marginally lower rate (current average cost at 9.6%). With base rate reduction, the cost of bank funding (current average cost at 10.85%) would come down more sharply in FY14. With incremental spreads expected to sustain at 1.6-1.7%, spread on the overall book is likely to improve materially from existing ~1.1%.
  • Credit quality deteriorated sharply on account of slippages of ~Rs1.7bn in the project loan portfolio. The delinquencies comprised default by three developers. Company provided 15% on these bad loans while provision on individual loan book was marginal due to recovery related write-backs. Gross NPLs/Net NPLs jumped to 0.74%/0.45% respectively. As per management, recovery of the slipped developer loans is likely to happen by March and therefore these loans could move out of GNPL block.
  • LIC HF Q3 FY13 results were disappointing with net profit coming in 13% below our estimate. We are now building in a more gradual recovery in margin over FY13-15, leading to 10-12% reduction in earnings estimates. We also expect lower RoAs of 1.4-1.5% over FY13-15. A sharp reduction in stock price over the past few days however leaves material upside over next 9-12 months. We retain BUY rating on LIC HF with 9-month target of Rs294.
Result table
(Rs mn) Q3 FY13 Q2 FY13 % qoq Q3 FY12 % yoy
Total Interest Income 19,347 18,400 5.1 15,886 21.8
Interest expended (15,353) (14,546) 5.6 (12,129) 26.6
Net Interest Income 3,994 3,855 3.6 3,757 6.3
Other income 203 218 (7.1) 40 404.5
Total Income 4,196 4,073 3.0 3,797 10.5
Operating expenses (673) (679) (0.9) (534) 26.1
Provisions (319) (69) 358.9 797 (140.0)
PBT 3,205 3,324 (3.6) 4,060 (21.1)
Tax (843) (894) (5.7) (1,003) (16.0)
Reported PAT 2,362 2,431 (2.8) 3,057 (22.7)
EPS 4.7 4.8 (2.8) 6.4 (27.3)






Loan disbursements 60,050 58,370 2.9 47,220 27.2
O/S mortgage portfolio 727,040 691,188 5.2 587,070 23.8
 
Key  Ratios Q3 FY13 Q2 FY13 chg qoq Q3 FY12 chg yoy
NIM (%) 2.1 2.1 (1.0) 2.3 (18.0)
GPNL (%) 0.7 0.6 23.3 0.6 17.5
Net NPA (%) 0.5 0.3 0.2 0.4 0.1
Source: Company, India Infoline Research

Financial Summary
Y/e 31 Mar (Rs m) FY12 FY13E FY14E FY15E
Total operating income 16,241 16,893 21,474 27,086
yoy growth (%) (8.3) 4.0 27.1 26.1
Operating profit (pre-provisions) 13,870 14,190 18,366 23,512
Net profit 9,142 9,525 12,227 15,710
yoy growth (%) (6.2) 4.2 28.4 28.5





EPS (Rs) 18.1 18.9 24.2 31.1
Adj. BVPS (Rs) 110.8 122.0 140.1 163.9
P/E (x) 13.7 13.1 10.2 8.0
P/BV (x) 2.2 2.0 1.8 1.5
ROE (%) 18.6 15.7 17.7 19.6
ROA (%) 1.6 1.4 1.4 1.5
Dividend yield (%) 1.3 1.3 1.8 2.2
Source: Company, India Infoline Research

BSE 556.55 10.80 (1.98%)
NSE 556.25 11.15 (2.05%)

***Note: This is a NSE Chart

 

Advertisements

  • Save upto Rs.2.67 lakh with Pradhan Mantri Awas Yojana ...Know more
  • Now Save Rs.3150 on your Demat Account ...Click here
  • Now get IIFL Personal Loan in just 8* hours...APPLY NOW!
  • Get the most detailed result analysis on the web - Real Fast!
  • Actionable & Award-Winning Research on 500 Listed Indian Companies.