LIC Housing Finance - Retail doing well, developer witnesses stress - ICICIdirect

LIC Housing Finance (LICHF) reported PAT of Rs. 236 crore (down 23% YoY) below our estimates mainly on account of higher-than-expected provisions (4.6x QoQ) against the write-back last year. The management attributed such higher provisions towards higher slippages in the developer segment, which are expected to be recovered in Q4FY13.

Margins remained stable QoQ at 2.1% against the anticipation of an improvement owing to interest reversals of Rs. 6 crore, which further kept profitability under pressure. However, growth in the loan portfolio remained strong at 24% YoY mainly led by individual loans. Developer proportion witnessed some improvement after eight straight quarters of decline. We have reduced our FY13E, FY14E PAT estimates by 9%, 3%, respectively, as we factor delayed improvement in NIMs.

We continue to value the stock at 1.8x FY15E ABV with our TP of Rs. 340. Maintain BUY.

Source : Equity Bulls

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