LIC Housing Fin hits year high on easing liquidity

LIC Housing Fin hits year high on easing liquidity
The Hindu Business Line, May 29, 2009, Page 12

‘Outlook on mortgage growth as asset quality has improved’.

Our Bureau, Kolkata

LIC Housing Finance on Thursday touched its 52-week high at Rs 520.70. It, however, closed at Rs 509.70, marking a 6.5 per cent gain. In the past week, the stock has gained over 17 per cent and its gain last month is around 55.5 per cent.

According to analysts, LIC Housing Finance was attracting investors’ attention in the past few weeks on easing of liquidity for small ticket borrowers and lowering of rates too.

According to Mr Amitbh Chakraborty, President (Equity) of Religare, expectations that the Government would continue to accord priority to 10 lakh or below housing finance to borrower for macro social and economic needs, have come true. “So a recovery of small housing finance stocks such as LIC Housing Finance and GIC Housing Finance were on the cards for some time.”

Incidentally, GIC Housing Finance also hit its 52-week high on Thursday at Rs 76.40. It finished at Rs 75.85, up over 19 per cent.

According to Edelweiss, LIC Housing Finance is delivering strong operating performance quarter after quarter on all key parameters such as loan growth (20 per cent plus), reduction of NPAs and margins.

“Moreover, the outlook on mortgage growth as asset quality has improved since January with change in macro environment and increased availability of capital.” Also, margins are expected to sustain due to sharp decline in wholesale funding cost, which will help LICHF sustain this strong performance.

Disbursements

LICHF is estimated to have improved its market share to 9 per cent plus in FY09 from around 6 per cent in FY08. Disbursements have also gone up 24 per cent. After muted disbursements over FY05-07, it has been gaining market share owing to internal restructuring.

As a result of better performance and relatively lower valuations, brokerages have recently upgraded rating for the stock. Emkay expects LICHF to report a 20 per cent CAGR in net operating revenues and earnings over FY09-11E.