LIC Housing Finance - Excess provision reversal - CSEC Research

LIC Housing Finance's performance was below expectations on account of lower loan book growth and margin pressure. Led by write back of excess provisions PAT was up 43%YoY at Rs 3.06b. Adjusted profit before taxes down 17%YoY.

Quarterly Highlights

- Revenues and operating profits lower than expected
- Business growth moderates further
- Credit growth at 26.6%YoY
- Disbursements to individuals up 8%YoY
- Asset quality healthy, net NPLs at 0.3%
- Margins under pressure
- Net interest income down 7.5%YoY
- Adjusted operating profits down 7.1%YoY

Valuation

At current levels the stock trades at 2X its FY13E adjusted book value (standalone) and about 9.3X its FY13E EPS (standalone). Low working capital requirements and a low fixed asset base aid in a commendable return on equity. With valuations having run up in the recent weeks we rate the stock a MARKETPERFORMER with a target price of Rs 273. Key risks to our recommendation include a lower than expected growth in disbursals and lower than expected spreads.

Source : Equity Bulls

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