Shares of LIC Housing Finance dropped as much as eight percent on Friday after disappointing Q2 earnings dragged the stock lower. The stock had a gap down opening of about six percent. LIC Housing Finance is trading lower than 5, 20, 50, 100 and 200-day moving averages.
CLSA noted that LIC Housing Finance reported mixed numbers, and maintained its ‘buy’ rating and a target price of Rs 540.
Also Read | Reliance Industries shares rise ahead of Q2 earnings
“Loan growth in home loans improved to a multi-quarter high of 15 percent YoY, off a low base. After several disappointing quarters, asset quality surprised positively with a 170bps improvement in stage 2+3 loans. However, spreads shrunk 25bps QoQ, leading to an eight percent QoQ decline in net interest income (NII); Rs 9.5 bn operating profit was the lowest in six quarters,” CLSA said.
Morgan Stanley has an ‘underweight’ call on the stock and said weak pre-provisioning operating profit which was driven by lower net interest income and higher expenses are key negatives.
At 10:45 am, shares of the financier were down 6.2 percent at Rs 412.80 apiece on the BSE.
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The housing financier’s consolidated net profit for Q2 FY22 tanked 68 percent on year to Rs 249.74 crore. Total revenue from operations fell to Rs 4,717.65 crore in Q2 from Rs 4,977.34 crore in the corresponding quarter last year. Meanwhile, net interest income was down five percent.
CLSA noted that LIC Housing Finance reported mixed numbers, and maintained its ‘buy’ rating and a target price of Rs 540.
Also Read | Reliance Industries shares rise ahead of Q2 earnings
“Loan growth in home loans improved to a multi-quarter high of 15 percent YoY, off a low base. After several disappointing quarters, asset quality surprised positively with a 170bps improvement in stage 2+3 loans. However, spreads shrunk 25bps QoQ, leading to an eight percent QoQ decline in net interest income (NII); Rs 9.5 bn operating profit was the lowest in six quarters,” CLSA said.
Morgan Stanley has an ‘underweight’ call on the stock and said weak pre-provisioning operating profit which was driven by lower net interest income and higher expenses are key negatives.
At 10:45 am, shares of the financier were down 6.2 percent at Rs 412.80 apiece on the BSE.
Catch LIVE stock market updates here.
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