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HDFC Securities: LIC Housing Finance - Q1 Earnings Beat, But Challenges Remain

LIC Housing Finance’s AUMs grew at their slowest pace since FY09 and moratorium book was sticky at 25%, HDFC Securities says.

Housing stands beyond electricity lines near the Indirapuram township in Ghaziabad, Uttar Pradesh, India (Photographer: T. Narayan/Bloomberg)
Housing stands beyond electricity lines near the Indirapuram township in Ghaziabad, Uttar Pradesh, India (Photographer: T. Narayan/Bloomberg)

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HDFC Securities Report

LIC Housing Finance Ltd.’s Q1 FY21 operating performance was only slightly higher than estimates, but earnings were considerably higher than estimates, on account of lower-than-expected provisions (limited liability partnerships and tax).

Assets under management growth was the slowest since FY09, and the moratorium portfolio remained sticky at 25% of loans (77% in the developer book).

The company faces several challenges in the near term:

1. a sticky moratorium book (particularly in the developer book),

2. inadequate coverage with minuscule Stage I and II provisions and negligible Covid-19 related provisions, and

3. stiff competition from banks, which would constrain growth and net interest margins.

Click on the attachment to read the full report:

HDFC Securities LIC Housing Finance 1QFY21 Result Update.pdf

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