LICHF came out with a positive set of results for 3QFY2017 with the PAT growing
by 19.2% yoy. While we were expecting moderation in business growth, due to
demonetization, better result was possible backed by growth in non-retail segment. The core retail portfolio continues to be sluggish growing
by less than 10%, however, other segments like LAP & Developer loans have been
driving the growth for LICHF. With lower interest rates and interest subvention
schemes by the Government, we expect growth for housing to rebound in the
coming quarters, which should help the company in posting loan book CAGR of
19% over FY2016-18E, translating into 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 Target Price of Rs630.

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