LIC Housing Finance - Retail back on track; bulk loans take out sheen - Emkay

Reco: ACCUMULATE
CMP: Rs243
Target Price: Rs280

- Even as LICHF's Q2FY13 NII/PAT at Rs3.5/2.4bn were below estimates, retail book shows signs of turnaround with yields improving 14bps qoq and spreads +6bps qoq (calc) thereon

- Q2 margins at 2.1% contracted -8bps qoq and was primarily due to re-pricing of liabilities on the upside and 13% qoq decline in the developer loan portfolio

- Even as we expect the exit retail spreads of 1.2% on retail portfolio, the lower developers' loans and probably lower spreads there warrant 14% erosion in FY13E earnings

- See trend reversal with improving retail spreads. Resilience of retail loan portfolio and low NPA risks, we remain positive. Like LICHF at current valuations of 1.9x/1.6x FY13/14E ABV

Source : Equity Bulls

Keywords