LICHF shares up 23% in a week

The shares of LIC Housing Finance (LICHF), hit by a bribery scam recently, staged a smart recovery this week. The stock closed 23 per cent up at Rs 194.20 as against Rs 158.44 on last Friday.

“The results (December quarter) were above expectations. Concerns about asset quality did not show in the results. Also, valuations have corrected from their peaks,” said an analyst with a broking firm.

A day after the company announced its third quarter results, the stock on Friday went up by 12 per cent.

The asset quality performance of the mortgage lender improved in the quarter and the proportion of bad loans (NPAs) fell. The net interest margin stood at 3.14 per cent, as against 2.93 per cent in the second quarter ended September 30.

“They have done a good job. After the scam came to light, there was general expectation of growth coming down. But both loan growth and margins have gone up. The stock was also cheap after the scam,” said Suresh Ganapathy of Macquarie.

He, however, added that margins would come under pressure. He expected NPAs to manifest themselves at a later stage.

To stem the damage done by the loan bribery scam, LICHF had stopped financing project developers. The mortgage lender reported a 24.5 per cent drop in sanctions to Rs 5,785 crore, compared to Rs 7,667 crore in the second quarter ended September 30.

However, the company said it would resume lending to real estate developers but sanctions would be on a case-by-case basis.

The company has projected growth of 35 per cent in the current quarter. It will look at raising Rs 8,000-10,000 crore during the period.