August , 2019
LIC Housing Finance Ltd.
15:44 pm

Rajesh Agarwal

Company Background

LIC Housing Finance Ltd. (LICHFL) is one of the largest housing finance companies in India having its registered and corporate office in Mumbai. Life Insurance Corporation of India holds founder, promoter & controller status in LIC HFL Company since 1989. The core business of the company is to provide long term finance for various housing needs. The Company provides finance to individuals as well as to corporate for purchase, construction, repair, renovations of new, existing flats and houses. It also offers finance for purchase / construction of Clinics / Nursing Homes / Diagnostic Centers / Office Space and also for purchase of equipments.

Investment Rationale


The company has one of the widest networks of offices across the country. It has 9 regional offices, 25 back offices and 282 marketing offices across India with established network of direct selling agents and home loan agents. LICHFL has set up a representative office in Dubai and Kuwait to cater to the non-resident Indians in the GCC countries covering Bahrain, Dubai, Kuwait, Qatar and Saudi Arabia.


LICHFL has four subsidiaries namely, LICHFL Care Homes Ltd, LICHFL Asset Management Company Ltd, LICHFL Trustee Company Pvt Ltd and LICHFL Financial Services Ltd.


The Company’s consolidated total income for Q1FY20 stood at Rs. 4,816 crore as against Rs. 4,069 crore during the same period previous year, marking a growth of 18%. Operating profit grew by 17% from Rs. 3,821 crore to Rs. 4,457 crore. Net profit after tax grew by 7% to Rs. 609 crore as compared to Rs. 567 crore, YoY. Net interest margin for the quarter was at 2.35% as against 2.32% for Q1FY19.


Disbursements during the quarter were at Rs. 10,261 crore as against Rs. 9,594 crore, a growth of 7% YoY. Out of that, disbursements in the home loan segment clocked a growth of 8% to Rs.7,871 crore, whereas in the project loan and construction finance were lower at Rs. 829 crore as against `889 crore.


In Q1FY20, outstanding loan portfolio increased by 16% YoY to Rs. 1,97,768 crore as against Rs. 1,69,866 crore out of which individual loan portfolio stood at Rs. 1,84,155 crore as against Rs. 1,61,467 crore, up by 14%. Within the individual loan portfolio, home loan portfolio stood at Rs. 1,49,341 crore with a growth of 12.4% YoY.


The Gross NPA/Net NPA increased to 1.98%/1.40% in Q1FY20, compared to 1.21%/0.83% in Q1FY19.


The budget this year proposed additional Rs. 1.5 lakh deduction for interest on home loans and announced to introduce a new model tenancy law to boost the fragmented rental housing market which will certainly trigger a strong demand from end-users in the affordable category. Renewed emphasis on PMAY (Urban) is also encouraging. Recently FM also announced an additional Rs. 20,000 crore liquidity support to enhance the lending capacity.


LICHFL’s superior franchise, established network, robust business model, strong loan book, focus on asset quality and recovery aspect gives opportunities for substantial growth and healthy performance in future. The stock trades at ~7 times FY21 EPS of Rs. 60 at the CMP of Rs.  424.80. Hence, we recommend a BUY on the stock with a Target Price of Rs. 540 with an upside potential of ~27% from the current level with an investment horizon of 9-12 months.

LIC Housing Finance Ltd.

Industry Finance - Housing

No. of Shares (Cr)            50.47

Face value (Rs)                  2.00

Mkt. Cap (Rs. Cr)              21438.08

Price (23/08/2019)           424.80

Book Value (Rs)                                335.67

P/BV                                      1.27

BSE Code                             500253

NSE Code                            LICHSGFIN

Bloomberg                          LICHF IN

Reuters                                LICH.BO

Avg. Monthly Vol.            19,25,573

52 W H/L (Rs)                     586.80 / 387.60

Shareholding Pattern %

Indian Promoters                             40.31

Foreign Promoters                          0.00

DIIs                                                        9.12

FPIs                                                        32.46

Body Corporate                                2.11

Non-Institutions                               16.00

Total                      100

(As on June 30, 2019)




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