LIC Housing Finance woos Street with better-than-expected Q1 profit, net interest income, net interest margin

LIC Housing Finance shares soared on Friday, trading in large volumes after the housing finance company reported a mixed set of quarterly results. The LIC Housing Finance (LICHSGFIN) stock gained by as much as Rs 28.3 or 7.2 per cent to Rs 422.2 apiece on BSE, coming within Rs 25 of a 52-week high touched in September last year. 

At 10:41 am, LIC Housing Finance shares held on firmly to the green with an intraday gain of 4.2 per cent at Rs 410.5 apiece. As many as 2.8 lakh LIC Housing Finance shares changed hands on the bourse so far on Friday, as against a daily average of 95,000 in the past two weeks, according to provisional exchange data. 

LIC Housing Finance beat analysts’ forecasts in terms of quarterly profit, net interest income (NII) and net interest margin (NIM) but disappointed on the disbursement and asset quality fronts. 

LIC Housing Finance Q1 results

After market hours on Thursday, LIC Housing Finance reported a 43 per cent year-on-year jump in standalone profit to Rs 1,323.7 crore for the quarter ended June 30. Its net interest income — or the difference between interest earned and interest paid — increased 38.7 per cent to Rs 2,209.4 crore, according to a regulatory filing. 

Its net interest margin — a key measure of profitability for a financial institution — improved to 3.21 per cent for the June quarter from 2.93 per cent a year ago.

According to Zee Business research, the company’s quarterly net profit was estimated at Rs 1,100 crore and NII at Rs 1,930 crore, and its NIM was estimated to decline by 20-30 bps on a year-on-year basis.    

LIC Housing Finance’s loan disbursement decreased 28.6 per cent to Rs 10,856 crore for the first quarter of the current financial year.

Its asset quality — measured as the percentage of bad loans in total loans — worsened. The company reported gross non-performing assets (NPAs) of 4.98 per cent and net bad loans of 2.99 per cent for the three-month period. Zee Business analysts had estimated LIC Housing Finance’s gross NPAs at 2.4 per cent and net NPAs at 2.4 per cent.

Brokerage  Rating Target price TP vs Thursday’s closing price
CLSA Buy  Rs 550 +39.6%
Morgan Stanley Underweight Rs 320 -18.8%
Jefferies Buy  Rs 500 +26.9%
Macquarie  Outperform Raised to 450 from Rs 430 +14.2%

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