LIC Housing Finance: Q2FY14 Results Analysis

LIC Housing Finance has come out with an impressive set of numbers for the quarter ended September 2013. The company's total income improved by 24% to Rs 2302 crore in Q2FY14 as against Rs 1862 crore reported in the same period last fiscal. The net profit of the company registered a growth of 28% and stood at Rs 310 crore in this quarter against Rs 243 crore in Q2FY13.

The Net Interest Income during reported quarter showed a good growth of 28% and stood at Rs 453 crore as against Rs 354 crore for the same period last year. Net Interest Margins for Q2FY14 stood at 2.22% against 2.10% for the quarter ended September 30, 2012.

The disbursements in the developer loan came in at Rs 265 crore in this quarter against just Rs 121 crore for the same period last year. The company disbursed a total of Rs 5947 crore during second quarter as against Rs.5838 crore for the same period last year.

Despite of good earnings growth, the company is facing issues related to maintaining its asset quality. Total gross NPAs for the company including NPAs on developer loans stood at 0.73% as on September 30, 2013 as against 0.60% as on September 30, 2012. The company's gross NPAs in individual segment was Rs 374 crore or 0.46% as on September 30, 2013 as against Rs 406 crore or 0.61% as on September 30, 2012.  NPAs on Developers Loans stood at Rs 236 crore as on September 30, 2013 as against Rs 246 crore as on June 30, 2013. Net NPAs stood at 0.44% as on September 30, 2013 as against 0.28% as on September 30, 2012.

We expect that the asset quality of the company is likely to improve in coming quarter as and when the economy revives. The company's stock will perform well till the time the company is able to maintain its NII margins. Further, the recent bullish sentiments in Indian market will re-rate the stock and one can have fresh exposure in this stock to earn moderate appreciation.