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Since LIC Housing Finance Limited (NSEI:LICHSGFIN) released its earnings in March 2018, it seems that analyst forecasts are fairly optimistic, as a 14.76% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of 13.15%. With net income at current levels of ₹20.14B, we should see this rise to ₹23.11B in 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here. View our latest analysis for LIC Housing Finance
What can we expect from LIC Housing Finance in the longer term?
The 29 analysts covering LICHSGFIN view its longer term outlook with a positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for LICHSGFIN, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
From the current net income level of ₹20.14B and the final forecast of ₹30.51B by 2021, the annual rate of growth for LICHSGFIN’s earnings is 12.54%. This leads to an EPS of ₹61.47 in the final year of projections relative to the current EPS of ₹39.91. The bottom-line growth seems to be caused by a high top-line growth of 14.59% falling down into the bottom line. This high rate of growth of revenue squeezes margins, as analysts predict an upcoming margin contraction from the current 53.82% to 50.29% by the end of 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For LIC Housing Finance, there are three relevant factors you should further examine:
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Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
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Valuation: What is LIC Housing Finance worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether LIC Housing Finance is currently mispriced by the market.
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Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of LIC Housing Finance? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.