LIC Housing shares climb 10% after Q1 results. Motilal Oswal maintains ‘Buy’ on the stock

Shares of LIC Housing Finance rallied 10 per cent in Friday's trade after the housing finance company (HFC) delivered a healthy performance in the June quarter, led by NII growth, moderation in opex ratios and lower credit costs.

LIC Housing reported a 43 per cent YoY rise in profit at Rs 1,323.66 crore against Rs 925.48 crore in the year-ago quarter. Net interest income (NII) rose 39 per cent to Rs 2,209.44 crore against Rs 1,592.48 crore YoY. Net interest margin (NIM) for the quarter stood at 3.21 per against 2.51 per cent YoY.

The stock rose 9.79 per cent to hit a high of Rs 432.50 on BSE.

Managing Director & Chief Executive Officer T Adhikari said the HFC aims to expand branch network in newer geographies to match the increase in demand.

"We are seeing an uptick in all categories of segment. Overall business indicators are positive despite high interest rates in the system. In the past, we have taken a lot of initiatives to improve the long-term performance of our company, which should hopefully start showing impact from the current year and help us to consolidate our position as the largest housing finance company in India," Adhikari said.

Brokerage Motilal Oswal said it was looking forward to LIC Housing's commentary on its plans to scale up disbursements, guidance on net interest income (NIM) and credit costs for FY24 at its earnings conference call on Friday. For now, the brokerage has a 'Buy' rating on the stock.

Motilal Oswal said asset quality witnessed sequential deterioration with GS3 increasing 60 bps QoQ. It said disbursements and loan growth were severely muted despite demand recovery in higher-ticket mortgages.

"It will be interesting to understand the management’s outlook on mortgages and what led to such tepid disbursement momentum during the quarter," it said.

 

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