MOSL: Morning India (27/November/18)-1. LIC Housing Finance; 2. Oil & Gas; 3. Siemens; 4. Arvind (ART); 5. Healthcare; 6. Cement; 7. Metals Weekly
MOrning India (27/November/18): 1. LIC Housing Finance (Beneficiary of a tight liquidity environment); 2. Oil & Gas (OMCs finally breathe a sigh of relief); 3. Siemens; 4. Arvind (ART); 5. Healthcare; 6. Cement; 7. Metals Weekly
Today’s top research idea
LIC Housing Finance: Beneficiary of a tight liquidity environment; Moderating competition to lead to better growth and spreads
- With tightening liquidity and rising fund costs, a shake-up in the system is imminent, which could result in changing competitive dynamics and favorable business environment for LICHF. Smaller players with lower credit ratings are likely to be less competitive than in times of abundant liquidity, leading to slowing balance transfers and moderating price wars for the industry.
- LICHF hiked its PLR four times in six months cumulating to 60bp, which should largely offset the rise in fund costs with spreads stable at 1.2-1.3%. Upside to spreads could accrue from cost of funds cooling off, driven by liquidity easing measures.
- LICHF raised capital only twice in the last 15 years and is not expected to raise capital in the near-term. The stock trades near decadal low valuation of 1.1x. Reiterate Buy with TP of INR550/share.
Piping hot news
IL&FS plan to sell stake in two arms gets good response
- The proposal by Infrastructure Leasing and Financial Services to sell stake in two of its subsidiaries has received strong interest with over a dozen firms submitting their bids. These are now being scrutinised by IL&FS for eligibility. Earlier this month, IL&FS has invited expression of interest from investors to sell stake in IL&FS Securities Services and ISSL Settlement & Transaction Services, both engaged in securities services business.
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