LIC Housing Finance
Propelled by the stable margins and loan growth LIC Housing Finance recorded better-than-expected earnings for the just concluded quarter and clocked 38% jump in its net profit to Rs 326.6cr as compared to the same period of the preceding fiscal. This was driven by a 24% rise in net interest income, which helped operating profit grow at around 27% in year. As a matter of fact, the net interest margins narrowed marginally to 2.16% in the quarter from 2.22% in the December quarter and the next few quarters will be better as it is looking at improvement in margins, said managing director and chief executive officer Sunita Sharma, adding that the cost of funds was slightly lower at 9.6-9.7% in the December quarter as short-term rates eased.

Dwelling in details, she added that individual loan disbursements by the company in the December quarter grew at a tepid pace of 6% to Rs 5,832cr, but this was better than the 2% growth seen in the September quarter. Loan pipeline is strong with 10% growth in sanctioned loans, which will lead to an improvement in disbursements in the coming quarters. The growth in disbursements in the developer segment declined 40% to Rs 297cr after doubling in the September quarter on a low base. The developer segment is a very small portion of the portfolio of around 3% and the financer is cautious in this segment. However, the developer segment is risky and had contributed the most to the asset quality problems at LIC Housing Finance last year. Defying slowdown, the retail housing loan growth and outlook remains buoyant. A further upside cannot be ruled out because the LIC Housing Finance stock is trading at cheap valuations of 1.3 times 2014-15 price-to-book rate and has underperformed.