LIC Housing Finance shares in focus after Subdued Q1; Morgan Stanley retains ‘underweight’ name

LIC Housing Finance shares at present: Shares of LIC Housing Finance Ltd edged larger on Monday morning. The inventory was buying and selling at Rs 583.80, up Rs 13.55 or 2.38 per cent, as of 9:58 AM.

The corporate reported a blended set of numbers for the April–June quarter. Whereas headline revenue and revenues confirmed average year-on-year development, bottom-line efficiency got here in barely under expectations as a consequence of elevated credit score provisioning and a weaker web curiosity margin (NIM).

Regardless of Monday’s early positive aspects, LIC Housing Finance has underperformed broader indices to this point this 12 months. The inventory is down round 5 per cent year-to-date, whereas the Nifty 50 has risen roughly 3 per cent over the identical interval.

Brokerage views on LIC Housing Finance

World brokerage Morgan Stanley has reiterated its ‘Underweight’ stance on the inventory, sustaining a goal worth of Rs 480 — properly under the present market stage. The agency mentioned pre-provision working revenue (PPOP) was broadly consistent with forecasts, however web revenue fell brief, weighed down by larger credit score prices. NIMs have been additionally softer, pushed by decrease calculated yields.

“The inventory might seem comparatively defensive in comparison with friends within the NBFC house, particularly given asset high quality enhancements. However that assist will not be sustainable within the medium time period, particularly in a rate-cutting atmosphere,” the brokerage famous in its commentary.

LIC Housing finance Q1 outcomes highlights

For the quarter ended June 30, LIC Housing Finance posted a 5 per cent year-on-year rise in web revenue, coming in at Rs 1,360 crore, up from Rs 1,300 crore a 12 months earlier. Complete revenue elevated to Rs 7,233 crore, in comparison with Rs 6,784 crore in the identical interval final 12 months.

On the expense facet, the corporate noticed a bounce to Rs 5,534 crore, up from Rs 5,155 crore a 12 months in the past. One brilliant spot was asset high quality, which confirmed a gentle enchancment. Gross non-performing property (GNPA) got here right down to 2.62 per cent from 3.29 per cent as of June 2024.

Internet NPA additionally improved, dropping to 1.3 per cent versus 1.68 per cent a 12 months in the past. Disbursements for the quarter stood at Rs 13,116 crore, up simply over 2 per cent from Rs 12,915 crore in Q1FY25. Residence mortgage disbursements noticed a 3 per cent enhance to Rs 11,247 crore. Undertaking loans, nonetheless, noticed a pointy decline, falling to Rs 156 crore from Rs 521 crore within the earlier 12 months.