Prabhudas Lilladher's research report on LIC Housing Finance
LICHF saw a weak quarter with earnings miss led by steep QoQ decline in NII due to one-time interest income impact of Rs2.75bn. Retail loans of Rs90bn were converted from fixed to floating although yield increase of 150bps was borne by LICHF which led to sharp NIM decline QoQ. NIM outlook for H2FY23 is much better as PLR is hiked by 115bps w.e.f. from 1st Oct’22 and NII could normalize to ~Rs15bn per quarter in H2FY23. Housing demand remains healthy indicating retail credit momentum could sustain while builder loans could uptick. Earnings remain volatile which has weighed on the stock and we trim our multiple from 1.1x to 0.9x.
Outlook
Due to cut in NII we reduce FY23/24/25 earnings by 15%/5%/3%. As we roll forward to Sep’24 ABV our TP is lowered from Rs450 to Rs410. Change rating from BUY to ACCUMULATE.
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