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HDFC Securities Report
LIC Housing Finance Ltd.'s Q1 FY21 operating performance was only slightly higher than estimates, but earnings were considerably higher than estimates, on account of lower-than-expected provisions (limited liability partnerships and tax).
Assets under management growth was the slowest since FY09, and the moratorium portfolio remained sticky at 25% of loans (77% in the developer book).
The company faces several challenges in the near term:
1. a sticky moratorium book (particularly in the developer book),
2. inadequate coverage with minuscule Stage I and II provisions and negligible Covid-19 related provisions, and
3. stiff competition from banks, which would constrain growth and net interest margins.
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