Company Information
LICHF has the second position in the market among housing finance companies and has improved to ~10% in the outstanding disbursements in FY2010. It has the strong position in individual loan (Retail) category, which accounts for over 90% of its loan portfolio.
Superiorities of the stock
- Strong growth visibility – on buoyant home loan demand and the company’s better service and turnaround time.
- strong returns profile – steady NIMs of ~2.85%, stable asset quality and improving RoE of ~23-24%.
- Expect loan growth of 30% CAGR and earnings growth of 28% CAGR over the next two years.
- Attractive on absolute and relative basis – trades at ~2.1x FY12 ABV: ~53% cheaper to HDFC.
Key Delta Triggers
- Margin progression in FY11 can Provide upside to our and street expectations.
- LICHF has shown interest in getting banking license: this development can act as strong catalysts.
Share Data (July 2010)
| Price | Rs. 1036/- |
| BSE Sensex | 18131 |
| Reuters code | LICHF.BO |
| Bloomberg code | LICHF IN |
| Market cap. (US$mn) | 2097 |
| 6M avg. daily turnover (US$mn) | 17.8 |
| Issued shares (mn) | 95 |
| Performance (%) | 1M | 3M | 12M |
| Absolute | (1) | 17 | 76 |
| Relative | (3) | (14) | (47) |
Valuation ratios
| Year upto 31 Mar. | FY11E | FY12E |
| EPS (Rs.) | 91.4 | 114.7 |
| +/- (%) | 31.7 | 25.5 |
| ABV (Rs.) | 428.3 | 512.7 |
| +/- (%) | 21.2 | 19.7 |
| PER (x) | 11.7 | 9.4 |
| PBV (x) | 2.5 | 2.1 |
| Dividend/Yield (%) | 1.9 | 2.2 |
Major shareholders (%)
| Promoters | 37 |
| FIIs | 32 |
| MFs | 14 |
| BFSI’s | 4 |
| Public & Others | 13 |