LIC Housing Financing Shares are the Focus after Q1 Shrink; Morgan Stanley maintains “underweight” calls
Today’s LIC Housing Finance Shares: LIC HOUTING FINANCE LTD shares were higher on Monday morning. As of 9:58 am, the stock was trading at Rs 583.80, up Rs 13.55 or 2.38%.
The company reported a mix of numbers for the April-June quarter. Although title profits and revenue showed modest year-on-year growth, bottom-line performance was slightly lower than expected due to increased credit provision and weaker net profit margins (NIM).
Despite Monday’s early earnings, LIC Housing Finance has underperformed and has underperformed its share so far this year. The stock fell just 5% year-on-year, while the Nifty 50 rose about 3% over the same period.
Brokerage landscape about LIC Housing Financing
Global broker Morgan Stanley reiterated its “underweight” position on the stock, with a target price of Rs 480, which is well below current market levels. The company said that the former weighted pre-operating profit (PPOP) is widely consistent with the forecast, but the net profit is insufficient and the credit costs are high. NIMS is also softer, driven by lower yields.
The broker noted in the comments: “The stock may look relatively defensive compared to its peers in the NBFC space, especially with improved asset quality. However, this support may not be sustainable in the medium term, especially in a context of speed of cuts.”
LIC Housing Finance Q1 Results Key
In the quarter ended June 30, LIC housing financing increased by 5% year-on-year to as high as Rs 1366 crore, up from Rs 13 billion a year ago. Total revenue increased to Rs 7233 crore, compared with Rs 6784 crore in the same period last year.
In terms of expenses, the company’s growth was Rs 553.4 crore, up from Rs 51.55 crore a year ago. Asset quality is a highlight, showing steady improvement. As of June 2024, total non-performing assets (GNPA) fell from 3.29% to 2.62%.
NPA net also improved, down to 1.3% a year ago, compared with 1.68%. Spending for the quarter was Rs 131.16 crore, up more than 2% from Rs 12,915 crore for Q1FY25. Home loan spending rose by 3% to Rs 11,24 crore. However, the decline in project loans has dropped sharply, from Rs 521 crore in the previous year to Rs 156 crore.
