LIC HOUSING FINANCE
Reco price: Rs 229;
Target price: Rs 299
Lic Housing Finance (LICHF) continues to see robust traction retail lending in Tier-I and Tier 2 cities. Tier-I centres such as Kolkata, Chennai, and Bangalore and Tier-II cities are still seeing 30-40 per cent disbursal growth. Overall disbursal growth appears likely to remain at 20-25 per cent in FY12 and 20 per cent in FY13. Project segment is still going slow due to selective lending incrementally and repayments from the existing book. LICHF saw a cumulative 100 basis points fall in net interest margin (NIM) in the first half of FY12, as liability re-pricing caught up. Q3FY12 could see a further 10-15 basis points NIM contraction, with further liability re-pricing and only a partial impact of a 40-basis points increase in lending rates. Analysts expect NIM to be 2.5 per cent for FY12. Maintain overweight.
—HSBC Global research
GRASIM INDUSTRIES
Reco price: Rs 2,412;
Target price: Rs 2,562
Following a sharp fall in the cotton price in the past one year in the global markets vis-à-vis other agri-products, the International Cotton Advisory Committee (ICAC) expects global cotton production to fall six per cent in 2012-13 over the 2011-12 season. Analysts believe prices are unlikely to decline sharply, as stocks may not increase in the 2012-13 season. Although, in the near term, profitability of the core VSF business (competes with cotton) is likely to be volatile, analysts believe in the medium term, Grasim's profitability will improve, with likely improvement in VSF volumes and in the profitability of the cement subsidiary. Maintain add.
—IIFL
HSIL
Reco price: Rs 139;
Target price: Rs 270
HSIL is witnessing strong revenue growth in both the building product and container glass segments. Analysts expect a Q3FY12 revenue growth of 28-30 per cent. Its expansion plans are on schedule for both the sanitary and glass divisions. Brownfield expansion of the 425 tpd furnaces (glass) in Bhongir is likely to be in full throttle by January 2012. Improvement in margin in the second half of FY12 will be on implementation of the 6.5 per cent (November) price increase in sanitary products and expected price rise of 6-6.5 per cent in the glass division from January 2012. Maintain buy.
—PINC Research
