Mr V. K. Sharma, the new CEO of LIC Housing Finance, assured us that the operations of LICHF remain strong and that the recent housing loan scam implicated only an individual in the company. The company has emphasized that the loans under consideration by CBI are secured, performing and in compliance with relevant regulatory norms. Notably, all developer loans above Rs100 mn disbursed by LICHF are appraised by CRISIL.
LICHF has not seen any slowdown in the retail lending business. The company has reported about 36% loan growth in September 2010 and we expect the pace to continue in 3QFY11 as well.
LICHF has currently stopped developer loans. The company continues to disburse loans approved in the past though it has not sanctioned any fresh proposals.
LIC Housing Finance EPS is expcted to be flat Rs 21.1 for FY 2012 and hence a 12 month stock target price of Rs 190-200 looks modest, hoping there isn't any negative news in the offing.
