LIC Housing Finance stock rallies 5% after Q1 net profit jumps 43%

Shares of LIC Housing Finance jumped nearly 5 percent in early trade on August 4 after the company reported strong earnings for the June quarter. At 9:41am, the stock was trading 3.32 percent up at Rs 411.20 on the NSE.

LIC Housing Finance reported a 43 percent surge in the standalone net profit to Rs 1,324 crore for the first quarter this fiscal on strong demand for housing loans.

The company’s net interest income (NII) surged 38 percent to Rs 2,252 crore during the quarter under review from Rs 1,628 crore in the last fiscal. The stage 3 exposure at default (gross non-performing asset) as of June 30, 2023, stood at 4.98 percent as against 4.96 per cent a year back. However, its net NPA decreased to 2.99 percent from 3.01 percent on-year.

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LIC Housing Finance’s total expenses in the said quarter increased 23 percent, with finance costs escalating 23 percent to Rs 4,494 crore and interest income rising 28 percent to Rs 6,704 crore. Housing demand in India has risen in the post-pandemic period, as an expanding middle class looks to invest in real estate despite higher interest rates and home prices.

Brokerage Views

Morgan Stanley has given an ‘underweight’ rating to the LIC Housing Finance stock with a target price of Rs 320 per share. “Sharp improvements in loan spreads caused an 18 percent net interest margin (NII) beat. Higher other income led to a 20 percent pre-provision operating profit (PPOP) beat. Home Loan Disbursements fell 24 percent QoQ and 28 percent YoY. Total loans grew 1 percent QoQ and 8 percent YoY,” said the brokerage house.

YES Securities is bullish on LIC Housing Finance and the brokerage firm has recommended the ‘buy’ rating on the stock with a target price of Rs 470 in its May 17 research report. Brokerage firm Sharekhan is also bullish on LIC Housing Finance and has recommended ‘buy’ rating on the stock with a target price of Rs 435.

Stock Performance

The LIC Housing Finance stock has given a return of 3.05 percent over the last six months. The stock has thus underperformed the benchmark Nifty50 index which has given a return of 9.10 percent over the same duration.

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