LIC Housing Finance
Estimate change
TP change
Rating change
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
LICHF IN
505
222.1 / 3.1
587 / 354
2/-23/-14
1294
31 January 2020
3QFY20 Results Update | Sector: Financials
CMP: INR440
TP: INR530 (+20%)
Buy
Asset quality continues to deteriorate; growth moderates
Higher credit cost leads sharp miss on estimates
Financials & Valuations (INR b)
Y/E March
2020E 2021E
NII
48.8
55.0
PPP
46.0
51.9
PAT
26.4
29.8
EPS (INR)
52.3
58.9
EPS Gr. (%)
8.7
12.6
BV/Sh (INR)
362
409
Ratios
NIM (%)
2.4
2.4
C/I ratio (%)
10.6
10.5
RoAA (%)
1.2
1.3
RoE (%)
15.3
15.3
Payout (%)
19.8
19.8
Valuations
P/E (x)
8.4
7.5
P/BV (x)
1.2
1.1
Div. Yield (%)
2.0
2.3
Shareholding pattern (%)
As On
Dec-19 Sep-19
Promoter
40.3
40.3
DII
15.1
14.6
FII
32.7
32.9
Others
11.9
12.2
FII Includes depository receipts
2022E
62.1
58.7
33.9
67.1
13.9
463
2.5
10.4
1.3
15.4
19.8
6.6
0.9
2.6
Asset quality continues to deteriorate
LICHF’s 3QFY20 PAT of INR6.0b missed our estimate by 13% due to
challenges on growth and asset quality. AUM growth slowed to 12% YoY
from the run-rate of 15-16%, while
GNPL ratio jumped 35bp QoQ to 2.73%.
More importantly, the spike in NPL was driven by 40bp sequential
increase in the individual lending GNPL ratio to 1.9%, while corporate
GNPLs were largely stable.
Other key highlights: (a) AUM mix was largely stable sequentially, with the
share of home loans at 76.8%, LAP at 16.4% and builders at 6.9%. (b)
Calculated cost of funds (CoF) declined 25bp QoQ to 8.17%, driving 12bp
spread improvement to 1.55%.
We cut our EPS estimates for FY20/FY21 by 6-8% to account for the
elevated credit costs.
Asset quality remains under pressure. GNPL ratio increased 150bp YoY to
2.73%.
What is more concerning is that the individual lending GNPL ratio
increased 100bp YoY to 1.9% (0.4%/1.1% in FY18/FY19). On a sequential
basis, the builder GNPL ratio stood stable at 14%.
We are also surprised to see GS2% going up by 100bp QoQ to 5.8%.
PCR has been maintained at 45%. Credit costs of INR4b were significantly
above our estimate of INR2.5b, leading to a sharp miss on estimates.
Individual loan disbursements were up 6% YoY to INR122b in the quarter.
For 9MFY20, individual disbursement growth remained muted at 6% YoY.
On the corporate front, disbursements declined 25% YoY to INR9.3b.
As a result, loan book grew 12% YoY to INR2.06t.
Note that the loan mix is
stable, with the share of home loans at 77% and LAP at 16%.
Given the strong parentage, LICHF continues to benefit in this tight funding
environment and has witnessed continued decline in CoF.
Calculated CoF
declined 25bp QoQ to 8.17%, driving 12bp spread improvement to 1.55%.
Project loans:
260 accounts in total. 25-27% of the book is in moratorium
(down from INR45b to INR25b QoQ). 5 cases in NCLT – hopeful of recovery
in 2 cases. 14 accounts of INR11b have been referred to GoI’s AIF. LICHF
carries 51% PCR on this book. Top 10 loans form ~15% of total loans.
Home loan GNPL ratio is 1.35% v/s 1.05% QoQ. LAP GNPL ratio above 3%.
Growth slowing down; spreads’ performance better than expected
Dec-18
40.3
11.0
28.8
19.9
Key concall highlights
Valuation and view
While LICHF’s operating performance has been steady, the continued increase
in the GNPL ratio is concerning. Individual GNPL ratio has increased 100bp YoY
over the past one year to 1.9%, driven by 60bp increase in home loan GNPL
ratio to 1.35%. The LAP book, which has scaled up rapidly over the past 3-4
years to INR300b+, is showing increasing delinquencies too. NPL recovery has
been sluggish. We forecast a similar environment for FY21, wherein credit costs
are likely to remain elevated at 65bp. Margin performance, has been strong,
given the parentage.
We forecast 11% loan book CAGR over the medium term
with RoA/RoE at 1.3% /15%.
We cut our EPS estimates for FY20/FY21 by 6-8%
to factor in the higher credit costs.
Buy with TP of INR530 (1.2x Dec ’21 BVPS).
Research Analyst: Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com);+91 22 6129 1526||
Piran Engineer
(Piran.Engineer@MotilalOswal.com); +91 22 6129 1539
Research Analyst: Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com);+91 22 6129 1526
Piran Engineer
(Piran.Engineer@MotilalOswal.com); +91 22 6129 1539
Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com); +91 22 6129 1542 |
Divya Maheshwari
(Divya.Maheshwari@motilaloswal.com); +91 22 6129 1540
Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com); +91 22 6129 1542 |
Divya Maheshwari
(Divya.Maheshwari@motilaloswal.com); +91 22 6129 1540
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
 Motilal Oswal Financial Services
LIC Housing Finance
Quarterly performance
Y/E March
1Q
Interest Income
40,050
Interest Expenses
30,253
Net Interest Income
9,797
YoY Growth (%)
5.8
Fees and other income
543
Net Income
10,339
YoY Growth (%)
11.2
Operating Expenses
846
Operating Profit
9,494
YoY Growth (%)
14.1
Provisions and Cont.
1,610
Profit before Tax
7,884
Tax Provisions
2,205
Net Profit
5,679
YoY Growth (%)
25.7
Key Operating Parameters (%)
Yield on loans (Cal)
9.53
Cost of funds (Cal)
8.26
Spreads (Cal)
1.27
Margins (Cal)
2.33
Credit Cost (Cal)
0.38
Cost to Income Ratio
8.2
Tax Rate
28.0
Balance Sheet Parameters
Loans (INR B)
1,687
Change YoY (%)
14.7
Indiv. Disb. (INR B)
87
Change YoY (%)
5.0
Borrowings (INR B)
1,477
Change YoY (%)
14.4
Loans/Borrowings (%)
114.2
Asset Quality Parameters
(%)
GS 3 (INR B)
20.4
Gross Stage 3 (% on
Assets)
1.21
NS 3 (INR B)
13.9
Net Stage 3 (% on Assets)
0.83
PCR (%)
32.0
ECL (%)
0.54
Loan Mix (%)
Home loans
79.0
LAP
16.0
Non Individual loans
5.0
Borrowing Mix (%)
Banks
11.5
NCD
74.3
Sub Debt
1.7
Deposits
4.7
NHB
1.3
CP
6.6
FY19
2Q
3Q
41,859 43,724
31,382 33,299
10,477 10,425
20.5
41.4
220
668
10,696 11,093
11.5
38.2
1,049
1,173
9,647
9,921
11.5
39.7
2,194
1,325
7,453
8,596
1,722
2,633
5,732
5,963
11.5
25.5
9.72
8.31
1.41
2.43
0.51
9.8
23.1
1,760
16.2
113
9.2
1,545
15.6
113.9
9.74
8.46
1.28
2.32
0.30
10.6
30.6
1,831
17.2
115
1.9
1,603
16.5
114.2
4Q
45,986
33,981
12,005
21.4
593
12,598
21.4
1,683
10,915
23.7
1,052
9,862
2,927
6,936
16.7
9.74
8.21
1.52
2.54
0.22
13.4
29.7
1,946
16.2
166
9.8
1,706
17.4
114.1
1Q
47,565
36,026
11,539
17.8
507
12,046
16.5
1,064
10,982
15.7
2,573
8,409
2,302
6,107
7.5
9.70
8.39
1.31
2.35
0.52
8.8
27.4
1,978
17.3
94
8.4
1,730
17.1
114.3
FY20
2Q
3Q
49,100 49,432
37,018 37,152
12,082 12,279
15.3
17.8
691
533
12,772 12,812
19.4
15.5
1,431
1,383
11,341 11,430
17.6
15.2
2,780
3,977
8,561
7,453
837
1,478
7,724
5,975
34.8
0.2
9.85
8.42
1.44
2.42
0.56
11.2
9.8
2,008
14.1
117
3.6
1,788
15.8
112.3
9.73
8.17
1.56
2.42
0.78
10.8
19.8
2,057
12.3
122
6.1
1,850
15.4
111.2
FY19
4QE
51,810 171,610
38,879 128,916
12,930 42,694
7.7
21.2
819
2,008
13,750 44,702
9.1
20.9
1,549
4,726
12,201 39,976
11.8
22.7
3,902
6,181
8,299 33,796
1,682
9,486
6,617 24,310
-4.6
21.4
FY20E 3QFY20E Act. v/s
est. (%)
197,906 50,271
-2
149,075 38,129
-3
48,831 12,142
1
14.4
16.5
2,550
600 -11
51,380 12,742
1
14.9
14.9
5,427
1,454
-5
45,953 11,288
1
15.0
13.8
13,232
2,500
59
32,722
8,788 -15
6,299
1,889 -22
26,423
6,898 -13
8.7
15.7
11.3
20.3
2,141
10.0
162
-2.4
1,884
10.4
113.6
10.6
28.1
1,930
16.1
482
6.8
1,708
17.4
113.0
10.6
19.3
2,141
11.0
496
3.0
1,884
10.3
113.6
11.4
21.5
-5.4
-7.8
22.3
1.20
10.6
0.61
52.3
0.89
78.0
16.0
6.0
16.0
68.2
1.3
4.3
1.1
9.2
22.9
1.26
7.4
0.41
67.7
0.85
77.2
16.5
6.3
14.0
74.0
1.0
5.0
1.0
5.0
30.8
1.53
15.5
0.80
49.6
0.85
76.1
17.2
6.7
15.0
75.0
1.0
4.0
1.0
4.0
39.2
1.98
21.6
1.10
44.9
0.97
76.2
16.9
6.9
13.7
72.6
1.2
5.3
1.3
6.0
47.8
2.38
27.0
1.36
43.6
1.09
76.5
16.7
6.8
15.5
71.7
1.2
5.9
1.2
4.6
56.2
2.73
30.6
1.51
45.4
1.26
76.8
16.4
6.9
19.0
68.0
1.0
6.0
1.0
5.0
29.7
1.5
20.6
1.1
30.6
60.6
2.8
42.4
2.0
30.0
Source: MOFSL, Company
31 January 2020
2
 Motilal Oswal Financial Services
LIC Housing Finance
Highlights of management commentary
Business Updates
PMAY:
During the quarter, 16,000 loan accounts worth INR34b were disbursed
(up 88% QoQ and 106% YoY).Total 40,800 loan accounts worth INR84b are
outstanding.
Project loans: 260 accounts in total. 25-27% of the book is in moratorium
(down from INR45b to INR25b QoQ). 5 cases in NCLT – hopeful of recovery in 2
cases. 14 accounts of INR11b have been referred to GoI’s AIF. 51.17% PCR on
this book. Top 10 loans would be ~15% of total loans.
LRD book in project loans stood at INR30b. Individual LRD would be INR80b
(the balance is part of the individual book).
Receiving regular repayment from homebuyers of stalled projects in NCR.
New product – Principal repayment holiday up to 48 months for under
construction property purchases.
~40% of the total loan book (INR2t) would be for under construction loans.
LAP book – Average ticket size is INR1.5m. 74% of this book is to salaried
customers. 30% of these customers are ex-home loan customers. Contractual
duration is 10 years, but actual is 6-7 years.
Asset Quality
In the retail segment, INR1.8b worth loans are up to date, but customers have
defaulted on other loans. Hence, LICHF has classified them as NPL.
Individual GNPL ratio is 1.92%. Corporate GNPLs declined INR240-250m QoQ.
Home loan GNPL ratio is 1.35% v/s 1.05% QoQ. LAP GNPL ratio is above 3%.
Increase in LAP NPLs would be INR2-2.5b QoQ, balance slippages are from home
loans and multiple account loans.
Increase in Stage 2 loans is mostly from the retail segment.
Around 2,000 accounts, which were NPLs in 2QFY20 made payments in 3QFY20.
Others
During the quarter, LICHF raised USD200m of ECBs.
NR150b-160b of debentures due in the next 2 quarters.
According to Ind-AS, loans are reported after deducting specific provisions.
Less than 1% of customers have multiple sources.
In 9MFY20, disbursements in HL were 80.5% of total.
In some cases, SARFAESI takes even 1-2 years.
Self-employed professionals (doctors, lawyers, etc.) form 2% of the portfolio.
Among salaried customers, 25-30% are from the PSU sector.
Undrawn lines from banks would be more than INR100b.
31 January 2020
3
 Motilal Oswal Financial Services
LIC Housing Finance
Key Exhibits
Exhibit 1: Loan growth slows down
Loans (INR b)
YoY Gr. (%)
16
17
16
17
3
10
12
86
84
83
83
83
81
79
Exhibit 2: Loan mix sequentially stable (%)
Home Loans
4
13
4
13
4
13
4
13
5
14
LAP
5
16
6
16
Developer Loans
6
17
7
17
7
17
7
17
7
16
15
15
15
16
15
16
15
15
78
77
76
76
77
77
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 3: Cost of funds down by 30bp YoY
10.5 10.3
Cost of funds (%)
9.9 9.8
Yield (%)
Exhibit 4: Reported margins improve by 10bp YoY
2.8
3.0
2.5
2.5 2.4
2.4 2.4 2.4
2.3 2.4 2.3 2.4 2.3
9.7 9.7 9.7 9.7 9.9 9.7
9.3 9.5 9.5
8.8
8.5 8.2 8.4 8.4
8.4 8.4 8.5 8.3
8.2
8.1 8.3 8.3
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 5: Asset quality deteriorates 30bp sequentially
GNPA (%)
NNPA (%)
Exhibit 6: Bank borrowings up by 400bp sequentially (%)
NCD
10
9
12
9
79
12
9
79
12
9
79
12
10
78
11
10
79
Banks
14
12
74
16
16
68
12
14
74
Others
10
15
14
14
73
13
15
72
13
19
68
81
75
Source: MOFSL, Company
Source: MOFSL, Company
31 January 2020
4
 Motilal Oswal Financial Services
LIC Housing Finance
Valuation and view
Post the liquidity crisis in Sep’18, parentage and credit rating have been of
paramount importance for NBFCs/HFCs. LICHF has capitalized well on that front.
With declining cost of funds, the company should be able to keep spreads stable
in the wake of increasing pricing pressure from banks.
However, while the company’s operating performance has been steady, the
continued increase in the GNPL ratio is concerning. Individual GNPL ratio has
increased 100bp YoY over the past year to 1.9%, driven by 60bp increase in
home loan GNPL ratio to 1.35%.
The LAP book, which has scaled up rapidly over
the past 3-4 years to INR300b+, is showing increasing delinquencies too. NPL
recovery has been sluggish.
We forecast a similar environment for FY21, wherein credit costs are likely to
remain elevated at 65bp.
Given the cut-back in LAP and builder disbursements, we forecast 11% loan
book CAGR over the medium term with RoA/RoE at 1.3% /15%.
We cut our EPS estimates by 6-8% to factor in the higher credit costs.
Buy with
TP of INR530 (1.2x Dec ’21 BVPS).
Exhibit 7: We largely maintain our estimates
INR B
NII
Other Income
Net Income
Operating Expenses
Operating Profits
Provisions
PBT
Tax
PAT
Loans
Borrowings
RoAA (%)
RoAE (%)
Old Est.
FY20
49.1
2.5
51.6
5.5
46.0
10.3
35.7
7.1
28.6
2,187
1,925
1.3
16.5
FY21
55.5
2.7
58.2
6.1
52.1
12.7
39.4
8.3
31.1
2,430
2,138
1.3
15.8
FY20
48.8
2.5
51.4
5.4
46.0
13.2
32.7
6.3
26.4
2,141
1,884
1.2
15.3
New Est.
FY21
55.0
3.0
58.0
6.1
51.9
14.7
37.2
7.4
29.8
2,383
2,085
1.3
15.3
FY20
-0.5
-0.4
-2.0
-0.2
28.6
-8.5
-7.6
-2.1
-2.1
% Change
FY21
-1.0
-0.4
-1.2
-0.3
15.8
-5.5
-4.3
-1.9
-2.5
Source: MOFSL, Company
Exhibit 8: One-year forward P/B
3.5
2.6
1.7
0.8
1.9
1.4
1.0
1.1
P/B (x)
Min (x)
2.3
Avg (x)
+1SD
Max (x)
-1SD
2.9
Exhibit 9: One-year forward P/E
P/E (x)
Min (x)
21.0
16.0
11.0
6.0
1.0
11.2
6.4
13.8
8.7
7.1
Avg (x)
+1SD
Max (x)
-1SD
17.8
Source: MOFSL, Company
Source: MOFSL, Company
31 January 2020
5
 Motilal Oswal Financial Services
LIC Housing Finance
Valuation Matrix
Rating
66
FY21E
HFCs
HDFC*
LICHF
PNBHF
REPCO
Vehicle financiers
SHTF
MMFS
CIFC
Diversified
BAF
SCUF
LTFH
MUTH
INDOSTAR
MAS
Wholesale
ABCL
Buy
Buy
Neutral
Buy
Buy
Buy
Buy
Neutral
Buy
Buy
Neutral
Buy
Buy
Buy
CMP
(INR)
2,416
440
442
332
1,046
368
326
4,363
1,357
117
773
272
969
100
Mcap
(USDb)
58.2
3.1
1.0
0.3
3.3
3.2
3.6
35.2
1.3
3.3
4.3
0.4
0.7
3.1
P/E (x)
FY20E
25.9
8.4
6.2
6.8
8.5
16.9
18.0
43.2
8.1
9.8
11.6
13.2
30.0
11.5
FY21E
20.3
7.5
6.0
6.3
8.1
12.4
15.1
31.9
7.5
8.4
10.1
10.1
24.6
8.5
P/BV (x)
FY20E
3.4
1.2
0.9
1.1
1.3
2.0
3.5
7.8
1.2
1.6
2.8
0.8
5.2
1.2
FY21E
2.7
1.1
0.8
1.0
1.1
1.8
2.9
6.4
1.1
1.3
2.3
0.7
4.4
0.9
RoA (%)
FY20E
1.9
1.2
1.4
2.6
2.5
1.9
2.3
4.1
3.8
2.2
6.4
1.6
4.5
1.9
FY21E
1.8
1.3
1.5
2.5
2.5
2.2
2.3
4.3
3.9
2.4
6.5
2.3
4.6
2.0
RoE (%)
FY20E
14.4
15.3
15.2
18.2
16.5
12.2
21.2
22.7
16.1
16.8
26.2
6.1
19.4
11.9
FY21E
14.1
15.3
13.9
16.7
15.2
15.0
20.9
22.1
15.1
17.0
25.2
7.4
20.2
11.6
31 January 2020
6
 Motilal Oswal Financial Services
LIC Housing Finance
Financials and Valuations
Income Statement
Y/E March
Interest Income
Interest Expense
Net Interest Income
Change (%)
Fee Income
Other Income
Net Income
Change (%)
Operating Expenses
Operating Profits
Change (%)
Provisions/write offs
PBT
Tax
Tax Rate (%)
PAT
Change (%)
Adjusted PAT
Change (%)
Proposed Dividend
2015
105,467
83,102
22,364
17.8
1,227
1,293
24,884
15.2
3,792
21,092
14.2
73
21,019
7,158
34.1
13,862
5.2
13,466
12.1
3,022
2016
122,509
93,068
29,441
31.6
1,453
893
31,787
27.7
4,687
27,100
28.5
1,465
25,636
9,028
35.2
16,608
19.8
16,608
23.3
3,333
2017
138,767
102,315
36,452
23.8
1,102
934
38,489
21.1
6,118
32,371
19.4
2,813
29,558
10,247
34.7
19,311
16.3
19,311
16.3
3,759
2018
146,662
111,439
35,223
-3.4
356
1,388
36,968
-4.0
4,396
32,572
0.6
4,917
27,655
7,630
27.6
20,025
3.7
20,025
3.7
3,998
2019
171,610
128,916
42,694
21.2
348
1,659
44,702
20.9
4,726
39,976
22.7
6,181
33,796
9,486
28.1
24,310
21.4
24,310
21.4
4,815
2020E
197,906
149,075
48,831
14.4
476
2,074
51,380
14.9
5,427
45,953
15.0
13,232
32,722
6,299
19.3
26,423
8.7
26,423
8.7
5,233
2021E
213,791
158,787
55,004
12.6
583
2,385
57,972
12.8
6,075
51,897
12.9
14,705
37,192
7,438
20.0
29,754
12.6
29,754
12.6
5,893
(INR M)
2022E
237,636
175,504
62,131
13.0
643
2,743
65,517
13.0
6,809
58,708
13.1
16,346
42,362
8,472
20.0
33,890
13.9
33,890
13.9
6,712
(INR M)
2022E
1,010
232,890
233,900
2,302,377
10.4
207,502
2,743,779
54,676
15.0
2,646,410
11.0
789
41,904
2,743,779
Balance Sheet
Y/E March
Capital
Reserves & Surplus
Net Worth
Borrowings
Change (%)
Other liabilties
Total Liabilities
Investments
Change (%)
Loans
Change (%)
Net Fixed Assets
Other assets
Total Assets
E: MOSL Estimates
2015
1,010
77,174
78,184
965,319
17.7
0
1,043,503
2,371
19.0
1,083,610
18.6
797
-43,275
1,043,503
2016
1,010
90,450
91,460
1,109,310
14.9
0
1,200,769
2,768
16.7
1,251,730
15.5
920
-54,649
1,200,769
2017
1,010
109,760
110,770
1,263,371
13.9
0
1,374,141
5,270
90.4
1,445,340
15.5
965
-77,434
1,374,141
2018
1,010
140,578
141,588
1,454,107
15.1
115,204
1,710,898
19,722
274.2
1,661,623
15.0
971
28,582
1,710,898
2019
1,010
160,662
161,672
1,707,727
17.4
136,436
2,005,835
35,951
82.3
1,929,927
16.1
1,359
38,598
2,005,835
2020E
1,010
181,851
182,861
1,884,453
10.3
156,901
2,224,215
41,343
15.0
2,141,424
11.0
1,179
40,270
2,224,215
2021E
1,010
205,712
206,722
2,085,225
10.7
180,436
2,472,383
47,545
15.0
2,383,114
11.3
989
40,736
2,472,383
31 January 2020
7
 Motilal Oswal Financial Services
LIC Housing Finance
Financials and Valuations
Ratios
Y/E March
Spreads Analysis (%)
Avg. Yield on loans
Avg. Cost-Int. Bear. Liab.
Spread on loans
NIM on loans
Profitability Ratios (%)
Adj RoAE
Adj RoAA
Int. Expended/Int.Earned
Other Inc./Net Income
Efficiency Ratios (%)
Fees/Operating income
Op. Exps./Net Income
Empl. Cost/Op. Exps.
Asset-Liability Profile (%)
Loans/Borrowings Ratio
Debt/Equity (x)
Gross NPAs (Rs m)
Gross NPAs to Adv.
Net NPAs (Rs m)
Net NPAs to Adv.
2015
10.6
9.3
1.25
2.2
2016
10.5
9.0
1.52
2.5
2017
10.3
8.6
1.7
2.7
2018
9.4
8.2
1.2
2.3
2019
9.6
8.2
1.4
2.4
2020E
9.7
8.3
1.4
2.4
2021E
9.5
8.0
1.5
2.4
(%)
2022E
9.4
8.0
1.4
2.5
17.5
1.4
78.8
5.2
19.6
1.5
76.0
2.8
19.1
1.5
73.7
2.4
15.9
1.3
76.0
3.8
16.0
1.3
75.1
3.7
15.3
1.2
75.3
4.0
15.3
1.3
74.3
4.1
15.4
1.3
73.9
4.2
1.1
15.2
34.1
1.2
14.7
32.1
0.8
15.9
40.2
0.2
11.9
50.8
0.2
10.6
52.5
0.2
10.6
53.0
0.3
10.5
54.4
0.3
10.4
55.8
112.3
12.3
4,947
0.5
2,344
0.2
2015
154.8
3.8
27.5
5.2
5.0
112.8
12.1
5,678
0.5
2,705
0.2
2016
181.1
17.0
32.9
19.8
5.5
114.4
11.4
6,271
0.4
2,053
0.1
2017
219.4
21.1
38.2
16.3
6.2
114.3
10.3
13,036
0.8
7,117
0.4
2018
280.4
27.8
1.6
39.7
3.7
11.1
6.8
1.5
113.0
10.6
29,720
1.5
20,630
1.1
2019
320.2
14.2
1.4
48.1
21.4
9.1
7.6
1.7
113.6
10.3
60,599
2.8
42,419
2.0
2020E
362.1
13.1
1.2
52.3
8.7
8.4
8.9
2.0
114.3
10.1
86,296
3.6
60,407
2.5
2021E
409.4
13.0
1.1
58.9
12.6
7.5
10.0
2.3
114.9
9.8
114,893
4.3
80,425
3.0
2022E
463.2
13.1
0.9
67.1
13.9
6.6
11.4
2.6
Valuation
Book Value (INR)
Growth (%)
Price-BV (x)
EPS (INR)
Growth (%)
Price-Earnings (x)
Dividend Per Share
Dividend Yield (%)
E: MOSL Estimates
31 January 2020
8
 Motilal Oswal Financial Services
LIC Housing Finance
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial
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available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a
registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and
National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National
Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance
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Details of associate entities of Motilal Oswal Financial Services Limited are
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http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report
should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific
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https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated
from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability
or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong
Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers
Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any
brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is
intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as
"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which
this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration
provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange
Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-
dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
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Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
31 January 2020
9
 Motilal Oswal Financial Services
LIC Housing Finance
***************************************************************************************
*****************************************
The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company
- received compensation/other benefits from the subject company in the past 12 months
- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
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This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent
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nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for
informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing
in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this
document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views
expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade
securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from
time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or
may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,
directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or
entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in
all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
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The person accessing this information specifically agrees to exempt MOFSL or any of its
affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such
misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person
accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;
Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is
a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.
Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.
Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no
assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance
Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
31 January 2020
10