The week past and expected
Technically speaking: In the last week the market has fallen to the lowest level of the support lists 4692/15725, which
is nearly 80% erosion of the entire rise between 4539 (intermediate support) and 5310 (highest level of the current rally)
that may be an indication of short term over sold nature of the market. Second, the market is nearing to its psychological
support area 4650/15580 (200 days SMA), that may invite side line investors to park few funds around the same with a
long term view.
Both these observations may help the market to stabilize at least for the short term and may result in to short term pull
back (rally) if technically the market sustains above the level 4690 for next few days. On the higher side we may expect
pull back up to 4830/16200 levels as to beat these levels markets requires strong positive news flow. Any reversal activity
from these levels will be an opportunity to sell short with a downward target 4600/4550 minimum. In case some thing
really comes positive then the short term pull back may extend to upper boundary of the distribution zone to 4930/50
(16500). Be cautious at higher levels.
LIC HOUSING FINANCE
PRICE: RS.752 RECOMMENDATION: BUY
TARGET PRICE: RS.930 FY11E P/E: 9.2X; P/ABV: 1.8X
q Strong traction in mortgaged loans likely to continue; we maintain our
advances growth estimate at 30% yoy in FY10 and 25% yoy in FY11
q Further improvement in NIM likely; re-pricing of high cost borrowings
during Q4FY10
q Glitch in asset quality performance during Q3FY10 was largely technical
in nature and is expected to be corrected in Q4FY10.
q We maintain our earnings estimates for LIC HF and recommend to Buy
the stock with a 12-month price target of Rs.930. At the current levels our
target price offers an attractive 24% upside.
Strong traction in mortgaged loans likely to continue; we maintain
our advances growth estimate at 30% yoy in FY10 and 25%
yoy in FY11
n Improving macroeconomic scenario and revival in retail demand will led to strong
traction in the mortgage finance business. India has relatively lower mortgage
penetration at ~6% of GDP, thus provides a broader landscape for mortgage finance
players.
n LICHF reported a robust growth of 85% yoy in disbursement to Rs.36.0bn and
72% yoy growth in sanction to Rs.45.2bn. For 9MFY10 sanctions grew by 34%
yoy to Rs.99bn and disbursements grew by 74% yoy to Rs.98bn.
n LICHF reported a strong growth of 35% yoy in its mortgage loans during 9MFY10
to Rs.341.7bn, in the backdrop of whopping 74% yoy growth in disbursement.
We opine that the strong mortgage loan growth trend is likely to continue during
the Q4FY10 as well, in the backdrop of improving demand for real estate from
the retail segment
