LIC Housing - Q1 FY22 first cut - YES Securities

Disappointment on all fronts

- PAT 80% below estimates, on NII miss of 17%, opex higher by 52% and near 2x credit cost

- NII decline of 17% qoq represents margin compression on likely higher interest reversals and a loan spread decline

- Opex was higher 20% qoq, within which there is a sharp jump in employee cost (one-offs and lumpiness needs to be watched out for here)

- Credit cost was elevated at Rs8.3bn - there could be catch-up (ECL was lower than peers) as well as flow provisions due to the adverse bucket movements in Q1 on account of the pandemic

- The company has mentioned about carrying out asset classification of the borrower accounts as per the extant RBI instructions/IRAC norms. The staging of borrower accounts was in accordance with ECL model (Ind AS) as of March 31, 2021.

- Though valuation is undemanding at 1x FY23 P/ABV, the volatility in performance has been more than palatable in the recent past. We have an ADD rating. Will review estimates and view post the call tomorrow morning.

Shares of LIC HOUSING FINANCE LTD. was last trading in BSE at Rs. 410.55 as compared to the previous close of Rs. 415.25. The total number of shares traded during the day was 392076 in over 11589 trades.

The stock hit an intraday high of Rs. 417.15 and intraday low of 406. The net turnover during the day was Rs. 161115064.

Source : Equity Bulls

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