LIC Housing Finance falls 7% post June quarter results

Shares of LIC Housing Finance dipped 7% to Rs 531 on the BSE in intra-day trade in otherwise strong market after the company reported disappointing April-June quarter (Q1FY19) results.

LIC Housing Finance reported 18% year on year (YoY) growth in net profit at Rs 4.79 billion in Q1FY19 on account of lower provisions under the IndAS framework. Net interest income grew 6.6% YoY at Rs 9.94 billion.

Despite having no major ALM mismatches, margins at 2.34% remained at multi-quarter lows. Gross non-performing assets (NPAs) ratio in individual segment has doubled from 0.72% to 1.21%.

“The housing finance company reported slowest quarterly performance in the many years on the back of single digit growth in individual housing segment, muted margins and deterioration in asset quality,” analysts at Antique Stock Broking said in a result review.

With nowhere else to go, PSU Banks got very aggressive in home loan space post demonetization. While this has pressurized the entire HFC ecosystem, LICHF has clearly been the worst impacted of the lot. On one hand, it has been struggling to grow its individual home loan book while on the other hand, there has been an intense pressure on yields. So much that margins have declined to lowest in the past four years despite having highest ever exposure to non-housing segments. We believe that competitive position of LIC Housing Finance has been eroded over years, the brokerage firm said with ‘hold’ rating on the stock with a target price of Rs 585.

In past two months, shares of LIC Housing Finance had outperformed the market by surging 20% against 9% rise in the S&P BSE Sensex till Friday.

At 10:23 am; the stock was trading 6.6% lower at Rs 534 on the BSE, as compared to 0.9% rise in the benchmark index. The trading volumes on the counter more than doubled with a combined 4.2 million equity shares changed hands on the BSE and NSE so far.