Reiterate 'BUY' on LIC Housing Finance – TP Rs.322 - Geojit BNP Paribas

- PAT missed estimates due to underperformance in developer loan book and Asset Liability Management (ALM) mismatch.

- Reported NIMs fell to 2.1% in Q2FY13, from 2.18% in Q1FY13 and 2.45% in Q2FY12. This trend is expected to reverse in H2FY13 as a large portion of the fixed rate loans are yet to be converted into a floating rate.

- Q2FY13 consolidated loan growth was up 23%, YoY and 10%, QoQ). Loan book was mainly driven by Individual loans (up 27%, YoY) while project loans, which declined by 33%, YoY, are expected to recover in H2.

- LICHF's undisbursed outstanding sanctions were Rs.500 crores as of September and it sanctioned additional loans worth Rs.200 crores in October. Project loan book at end-FY13 is expected to be flat with risk on the upside.

- Gross NPA improved to 0.6%, from 0.64% in Q2FY12.

- Majority of the growth came from Central / Eastern India (grew 30%+) and southern cities (25%) while growth from the Northern region was flattish.

- The number of customers increased 10% and the value of incremental loans grew 10-11%.

- We reiterate our BUY rating (Current Price: Rs.254) on LICHF with a Target Price of Rs.322.

Source : Equity Bulls

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