HSBC has maintained its ‘Overweight’ rating on LIC Housing Finance (LICHFL) revised its price target to Rs. 306 from Rs. 299.
LICHFL is currently trading at 12 month rolling multiples of 10.8x P/E and 1.8x P/B, which is close to its 3 year average multiples. Given the better growth and earnings prospects in 2012-13, HSBC continues to value LIC HFL at target multiples 10x PE and 2x PB.
After 3 quarters of successive margin decline, LICHFL has finally started seeing margin improving as funding cost has started coming off. 4QFY12 saw a 0.17% q – o - q pick up in margins.
Asset quality remained robust with gross NPLs declining to 0.42%.
Review by HSBC
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