Equity L/S Analyst | Forensic Accounting | India, Yellowstone Equity

Ankit Agrawal, CFA

I possess investment research experience across asset classes and geographies, acquired at Investcorp (New York) and Howe & Rusling (Rochester). At Investcorp, an alternative asset manager, I was part of an investment team managing >$1bn in discretionary client assets. I was also a member of investment recommendation, monitoring, cross-asset strategy and macro outlook committees that met periodically for investment decisions and top-down views. At Howe & Rusling, a long-only asset manager, I helped cover US large-cap equity investments across sectors for growth and income focused portfolios as well as assisted in managing a US small-cap growth focused equity portfolio. I possess an MBA in finance and corporate accounting from University of Rochester in US, a CFA Charter, and an Engineering degree from Indian Institute of Technology Bombay in India.  

My current focus is L/S equity fundamental research across market cap and sectors with an eye on corporate governance and forensic accounting. I am currently based in India and my current coverage universe is biased towards India.

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Regulatory Disclosure: Note that Ankit Agrawal (Proprietor of Yellowstone Equity) is a SEBI registered Research Analyst (Registration No.: INH000007216). Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Investment in securities market are subject to market risks. Read all the related documents carefully before investing.

Research Analyst Contact Details -
Address: A-602, Titanium Business Park, Makarba, Ahmedabad - 380051 |
Email: services@yellowstoneequity.com |
Mobile: +91-7575817289

Compliance/Grievance Officer -
Name: Ankit Agrawal |
Email: services@yellowstoneequity.com |
Mobile: +91-7575817289
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Equity L/S Analyst | Forensic Accounting | India

LIC Housing Finance: The Worst Could Be Behind Us; Post Moratorium Borrower Behavior Key

LIC Housing Finance: Asset Quality Weakens But Green Shoots Emerging

2020 High Conviction: LIC Housing Finance: A Growth Compounder Ripe for Re-Rating

LIC Housing Finance - Not Rational for Bulls or Bears

Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/lic-housing-finance-ltd" target="_blank" data-smartkarma-citation="entities:15667:1" rel="noopener">LIC Housing Finance (LICHF IN)</a> announced its earnings last weekend and had a subsequent conference call to discuss the business performance. While the performance appears lackluster optically with PAT down -40% YoY in Q4FY20, if we exclude one-offs like rise in other operating expenses (led by CSR expenses which were not booked in the same quarter last year), reversal of certain deferred tax assets (due to corporate tax rate cuts) and accounting losses in other income (FX losses that are fully hedged but offsetting hedge gains have been reported in other comprehensive income), the overall profitability (down only -5% YoY partly attributable to adverse operational impact from lockdown restrictions during the 2H of Mar) and growth trajectory (revenue growth of 6% YoY in Q4FY20) was reasonable despite the challenges.</p>
<div class="content-highlight">
<p>We believe housing finance remains among the most resilient credit segments in the COVID world and continues to be a sector with strong secular growth tailwinds. With LICHF being a dominant player in the space led by its strong liability franchise, widespread distribution presence, potential improvements in asset quality, peaking provisions and attractive valuation, LICHF remains an attractive investment opportunity. <strong>We believe that LICHF presents an upside potential of 110%+ from the current levels while downside from a permanent loss of capital standpoint is limited at current valuation.</strong></p>
</div>
<h3><strong>Insight Flow</strong></h3>
<ul>
<li>Key Highlights</li>
<li>Investment Thesis</li>
<li>Risks</li>
<li>Valuation</li>
</ul>

LIC Housing Finance (LICHF IN) announced its earnings last weekend and had a subsequent conference call to discuss the business performance. While the performance appears lackluster optically with PAT down -40% YoY in Q4FY20, if we exclude one-offs like rise in other operating expenses (led by CSR expenses which were not booked in the same quarter last year), reversal of certain deferred tax assets (due to corporate tax rate cuts) and accounting losses in other income (FX losses that are fully hedged but offsetting hedge gains have been reported in other comprehensive income), the overall profitability (down only -5% YoY partly attributable to adverse operational impact from lockdown restrictions during the 2H of Mar) and growth trajectory (revenue growth of 6% YoY in Q4FY20) was reasonable despite the challenges.

We believe housing finance remains among the most resilient credit segments in the COVID world and continues to be a sector with strong secular growth tailwinds. With LICHF being a dominant player in the space led by its strong liability franchise, widespread distribution presence, potential improvements in asset quality, peaking provisions and attractive valuation, LICHF remains an attractive investment opportunity. We believe that LICHF presents an upside potential of 110%+ from the current levels while downside from a permanent loss of capital standpoint is limited at current valuation.

Insight Flow

Key Highlights
Investment Thesis
Risks
Valuation


LIC Housing Finance | Reiterate Buy - The Worst Is Behind Us