“LIC Housing Finance Ltd. Or “LHFL” promoted by the LIC of India is one of the largest Housing Finance companies in India. The company provides Long-Term loans to Individuals, Corporate bodies, Builders and Co-operative Housing Societies for Purchase / Construction / Repair and Renovation of New / Existing flats / Houses and or Commercial property / Undeveloped areas of land. The Company runs its business through one of the most extensive marketing networks in India. Other than the 6 Regional Offices and 13 Back Offices, the company has 181 Marketing units across the length and breadth of the country. In addition LIC has appointed over 773 Direct Sales Agents (DSAs), 3400 Home Loan Agents (HLAs) and 615 Customer Relationship Associates (CRAs) to extend its marketing reach. For catering to the Non-Resident Indians in the Gulf nations, LIC has set up has a Representative Office in Dubai and Kuwait.”

“Over the past Five years, LHFL's Outstanding mortgage portfolio has accelerated at a CAGR of over 30% to Rs 51090 Crore (FY 11). Aided by strong pent-up demand in the Indian Housing market coupled with slew of Mid and Low-cost housing projects by Real Estate and Construction companies, LHFL has managed splendid growth in Disbursal during the same period. In FY 11 too, company’s Disbursal accelerated by around 34% to Rs 19912 Crore as against Rs 14853 Crore (FY 10).”

“Since incorporation, LHFL has Sanctioned Individual loans for a total amount more than Rs 65,500 Crore (FY 11) while Disbursed Indivisual loans around Rs 60,500 Crore (FY 11). Moreover, LHFL's distinction of servicing more than One Mln consumers has been possible due to the easy availability of funds. The company has got the highest rating for Bank borrowings, Non-convertible Debentures, Commercial paper and Public deposit scheme from CRISIL / CARE rating agencies, which help the Company to procure funds at very competitive rates.”

“Over the past five years, the Gross and the Net NPA's of LHFL have witnessed steady improvement. The Gross NPA's which remained in over 2.5% range in FY 07 has slipped down to 0.47% in FY 11. Backed by its strengthened appraisal and credit monitoring systems it's Net NPA during the same period declined to negligible levels of 0.03% (FY 11) as against 1.26% (FY 07). Currently company’s, Gross NPA’s stand at around Rs 246 Crore while the Net NPA’s have declinedto as low as Rs 15 Crore (FY 11). With the rising disposable income levels in the country, strong demand for Low cost housing, (target area of LHFL) coupled with the prudent Asset-liability management, strong brand name and extensive marketing network across the country; LHFL is expected to continue with the firm performance on both the Operational and Financial front, in the future as well. We recommend an “Accumulate” Rating on the stock for a target price of Rs 240 in medium term,” says JRG Securities research report.