Special rates for home loans to stimulate demand, according to Motilal Oswal
According to the brokerage, the company extended its lowest mortgage rate of 6.66% for the holiday season to borrowers with a CIBIL score of 700 and above, for loans up to 20%. million Rs (the previous limit was 5 million Rs).
“By segmenting borrowers based on their CIBIL score, regardless of job category, LIC Housing Finance aims to cater to a larger borrower base. banknote size from 5 to 20 million rupees, “the brokerage said.
Accelerating growth in disbursements
According to Motilal Oswal, the demand for home loans to individuals has been impacted by blockages located at 1QFY22.
“Nonetheless, individual home loan disbursements have been well above annual levels. We expect pent-up demand to be pronounced in the remaining nine months of the current fiscal year, resulting in healthy growth in disbursements for the fiscal year. 22. We forecast a CAGR of 11% of the loan portfolio in FY21 -24E. Since June 21, there has been an improvement in economic activity, and collection efficiency has also improved at 98%, which is encouraging. The sharp increase in Phase 3 loans is concerning. The same has been exacerbated due to the impact of the second wave of COVID. We now estimate a cost of credit of 85 bps / 60 bps in FY22E / FY23E, ”the brokerage said.
A good omen for the financing of LIC housing
India Post Payments Bank and LIC Housing Finance recently announced a strategic partnership to provide mortgage products to more than 45 million customers of India Post Payments Bank. “With its strong and extensive network of 650 branches and more than 136,000 bank access points, India Post Payments Bank will make LIC Housing Finance mortgage products accessible to all of its customers in India. The alliance will also provide LIC Housing Finance with access to India Post. Payments Bank’s field workforce, made up of nearly 200,000 postal workers equipped with micro-vending machines and biometric devices through its innovative home banking service. This will play an important role in providing LIC Housing Finance home loans, ”the brokerage said.
Assessment and view
With the completion of the preferential equity allocation to its promoter LIC, the capitalization / leverage issues for LIC Housing Finance have now been ironed out. “Given her background, she has been able to raise debt capital at low rates, which should maintain a healthy margin in a highly competitive environment. cost liabilities, favorable housing finance cycle and 11-12% RoE. While we anticipate an impact on FY22E, we estimate around 1.1% / 12% RoA / RoE during FY23, after registering the preferential grant of new shares.We maintain our buy rating with a target price of Rs 525 per share (1.1x FY23E BVPS), ”the brokerage said.
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