LIC Housing Finance share price surges over 11% on 34% rise in net profit in Apr-Jun quarter

The company’s total provisions declined 77.69 per cent to Rs 56.5 crore as compared to Rs 253 crore in a year-ago period

LIC Housing Finance share price jumped 11.45 per cent higher to Rs 308.40 apiece a day after the company reported a 34 per cent on-year growth in its net profit to Rs 817 crore for the April-June quarter. With today’s gain, LIC Housing Finance shares have rallied 66 per cent from March lows of Rs 186 apiece. The company’s total provisions declined 77.69 per cent to Rs 56.5 crore as compared to Rs 253 crore in the corresponding quarter of the preceding year. The net interest income stood at Rs 1,221 crore, up 3.3 per cent from Rs 1,182 crore in the year-ago period. “Opex increased by 36 per cent, however, lower provision cost has helped LIC Housing to report a PAT jump of 34 per cent YoY. Considering the current situation, the provision taken in Q4FY20 and Q1FY20 is much lower than expected. Lower valuation and not much negative in result stock could see positive movement for the midterm,” said Jaikishan Parmar, Sr. Equity Research Analyst, Angel Broking Ltd.

At 10.35 AM, LIC Housing Finance shares were trading 10.17 per cent higher at Rs 304.85 apiece, as compared to a 0.22 per cent rise in the benchmark S&P BSE Sensex. The research and brokerage firm Motilal Oswal Financial Services has given a ‘buy’ rating to the stock. It said that the overall moratorium rate remained stable at 25%. In retail home loans, the moratorium rate was 16%, marginally higher than its largest peer, HDFC.

The total loan portfolio stood at Rs 2,09,817 crore, against Rs 1,97,768 crore, a Y-o-Y growth of 6%. The individual loan portfolio was at Rs 1,95,176 crore. Over the past two years, LIC Housing Finance’s gross non-performing loans (GNPL) ratio has increased 160bp to 2.8%, driven by both retail and corporate delinquencies. “At the same time, growth has been sluggish, in the low double digits (barring 1QFY21). In the current pandemic situation, the company would face further headwinds on asset quality, especially in LAP and builder loans,” Motilal Oswal said in a report.