Greater demand in real estate – LIC Housing Finance

Greater demand in real estate – LIC Housing Finance

Update on the Indian Equity Market:
On Monday Nifty closed 0.8% higher at 14,133. Among the sectoral indices, IT (+2.7%), Metal (+5.1%), and Auto (+1.6%) closed higher. Pvt Bank (-0.1%) and Bank (-0.04%) were the only sectoral indices that closed lower. Tata Steel (+8.4%), Hindalco (+6.9%), and Eicher Motors (+4.3%) closed on a positive note. Hero Motors (-1.6%), Kotak Bank (-1.2%), and Bajaj Finance (-1.2%) were among the top losers.

Excerpts from an interview of Mr. Siddhartha Mohanty, MD & CEO, LIC Housing Finance with CNBC-TV18 dated 1st January 2020:
● The real estate sector faced issues because of lower liquidity and demand.
● Mr. Mohanty said these issues are addressed and now the demand is normal.
● The consumption demand has gone up and there is a pickup in new real estate registration.
● Not only the metros but even tier-2, tier-3 cities are showing high growth.
● He said the company will close in a high double-digit year on year growth by the end of FY21.
● Speaking about bad loans, he said the moratorium ended in August and now people who had opted for the moratorium have also started paying.
● He said there is an improvement in big accounts.
● Speaking on spreads and margins, he said the company is raising debt at a very competitive rate.

Consensus Estimate: (Source: market screener and websites)
● The closing price of LIC Housing Finance was ₹ 382 as of 04-January-2020. It traded at 8x/ 7x/ 5x the consensus Earnings per share estimate of ₹ 49.8/57.8/71.1 for FY21E/ FY22E/ FY23E respectively.
● The consensus average target price for LIC Housing Finance is ₹ 363/- which implies a PE multiple of 5x on FY23E EPS of 71.1/-.
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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