ICICI Direct has given Hold recommendation for LIC Housing Finance with a target price of Rs. 475 in its research report issued on Feb 16, 2021
ICICI Direct’s research report on LIC Housing Finance
LIC Housing Finance (LICHF) saw improved traction in individual business during the quarter while operating performance was steady. NII for LICHF saw flattish growth of 2.2% YoY at Rs 1281 crore, mainly on account of 6 bps YoY decline in margins to 2.36. Recent management commentary indicated that margins were benefitted from lower funding cost which was down by 36 bps in Q3FY21 and 83 bps in current fiscal, as liquidity environment remained favourable for the company. Other income jumped 73% YoY to Rs 48 crore aiding topline. Cost-to-income sequentially was steady at 13.4% vs. 13.2%. Provisions declined YoY by 54% to Rs 181 crore but QoQ were up 75%. Total provisions for Covid related and standstill accounts is to the tune of ~Rs 400 crore. PAT for the quarter was up 22% YoY to Rs 727 crore.
We believe there is limited room for upside. Thus we downgrade our rating from BUY to HOLD with a revised TP of Rs 475 (earlier Rs 345).