While Housing Development Finance Corp. Ltd’s (HDFC) fourth quarter (Q4) results have been good, how has LIC Housing Finance Ltd, the other popular stand-alone housing company, performed? Like HDFC, it hasn’t shown any slowdown in loan demand.
Disbursements in Q4 rose 48% over the year-ago period, compared with 49% in the December quarter. The growth in net interest income was maintained at 36%. Net interest margin improved in the last fiscal.
The company’s net profit rose 32%. A rise in “other income”, a result of a Rs10.5 crore reversal of provisioning, also helped boost profit. Shorn of this one-time boost, profit before tax in Q4 would have increased 40%, instead of the reported 49%.
But the biggest improvement has been in non-performing assets (NPAs). The gross NPA ratio has fallen substantially to 1.70% at the end of March, compared with 2.77% at the end of December. The net NPA ratio has also improved from 1.61% to 0.64%. It shows that the firm been not been affected by the slowdown, and has improved asset quality.
The company trades at around 1.4 times its book value in the current fiscal year. The reason is simple: the company’s performance has not been consistent in the recent past. If it can maintain the pace, the stock stands a good chance of getting re-rated.
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