LIC Housing Finance (LICHF)’s 2QFY17 results remained decent with the PAT
growing by 21.3% yoy. Balanced growth in retail as well as in developer portfolio
helped in improving the spread, while lower cost of funds helped in NIM improvement. While the core retail portfolio continues to be sluggish
growing by less than 10%, other segments like LAP & Developer loans have been
driving the growth. However, there is visible sign of pick up in the growth in some
pockets for the core retail loans. We expect the company to post a loan book
CAGR of 19% over FY16-18E, translating into an earnings CAGR of 18.0% over
the same period. The stock currently trades at 2.2x its FY2018E ABV. We maintain
our Buy rating on the stock with a revised target price of Rs630.

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