Discounted Cash Flow Calculation for NSEI:LICHSGFIN using Excess Returns Model Model
The calculations below outline how an intrinsic value for LIC Housing Finance is arrived at using the Excess Return Model. This approach is used for finance firms where free cash flow is difficult to estimate.
In the Excess Return Model the value of a firm can be written as the sum of capital invested currently in the firm and the present value of excess returns that the firm expects to make in the future.
The model is sensitive to the Return on Equity of the company versus the Cost of Equity, how these are calculated is detailed below the main calculation.
The current share price of
LIC Housing Finance
is above its future cash flow value.
Often investors are willing to pay a
for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
LIC Housing Finance's
is considered below, and whether this is a fair price.
Price based on past earnings
LIC Housing Finance's earnings available for a low price, and how does
this compare to other companies in the same industry?
LIC Housing Finance's earnings are expected to grow by 12.3% yearly, however this is not considered high growth (20% yearly).
LIC Housing Finance's revenue is expected to grow by 14.2% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
LIC Housing Finance's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
LIC Housing Finance
has a total score of
1/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Fundamentally a bank's business is based upon borrowing and lending money, for
this reason they typically have high levels of debt and we analyse them
This treemap shows a more detailed breakdown of
LIC Housing Finance's finances. If any of them are yellow this
indicates they may be out of proportion and red means they relate to one of the
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
Nearly all companies have debt. Debt in itself isn’t
however if the debt is too high, or the company can’t afford to pay the interest
on its debts this may have impacts in the future.
The graphic below shows equity (available funds) and debt, we ideally want to
see the red area (debt) decreasing.
If there is any debt we look at the companies capability to repay it, and
whether the level has increased over the past 5 years.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Vinay Sah has been Chief Executive Officer, Managing Director and Whole Time Executive Director of LIC Housing Finance Limited since April 12, 2017 and its Director. Mr. Sah serves as Zonal Manager Incharge for Zonal Office Mumbai at Life Insurance Corporation of India. Mr. Sah serves as a Zonal Manager of Life Insurance Corporation of India, East Central Zone, Patna, India. Mr. Sah has more than 30 years of experience in the field of insurance and business management. He served as a Non Executive Independent Director of Kesoram Industries Limited since November 3, 2011 until January 24, 2018. He holds a Masters Degree in Statistics from Lucknow University, India.
Insufficient data for Vinay to compare compensation growth.
Vinay's remuneration is lower than average for companies of similar size in India.
Management Team Tenure
Average tenure of the
LIC Housing Finance
management team in years:
The average tenure for the LIC Housing Finance management team is less than 2 years, this suggests a new team.
MD, CEO & Executive Director
Chief Financial Officer
GM of Taxation
Deputy CFO & Investor Relation Manager
General Manager of Legal & Audit
Chief Manager of Credit Monitoring - Non Core
General Manager of HR
Chief Manager of Compliance
Chief Executive Officer of LICHFL Asset Management Company Limited
General Manager of Subsidiary Monitoring
Board of Directors Tenure
Average tenure and age of the
LIC Housing Finance
board of directors in years:
The tenure for the LIC Housing Finance board of directors is about average.
What Should You Know About LIC Housing Finance Limited's (NSE:LICHSGFIN) Growth?
Since LIC Housing Finance Limited (NSE:LICHSGFIN) released its earnings in March 2018,. … conservative, with earnings growth rate expected to be 11% next year, which is within range of the past five-year average earnings growth of 13% … Currently with trailing-twelve-month earnings of ₹20b, we can expect this to reach ₹22b by 2020.
If You Bought LIC Housing Finance Limited (NSE:LICHSGFIN) Today, There May Be An Upside
Pricing LICHSGFIN, a financial stock, can be difficult since these banks have cash flows that are affected by regulations that are not imposed upon other sectors. … These lenders, for example, must hold certain levels of capital in order to maintain a safe cash cushion.
Is LIC Housing Finance Limited's (NSE:LICHSGFIN) PE Ratio A Signal To Buy For Investors?
LIC Housing Finance Limited (NSE:LICHSGFIN) trades with a trailing P/E of 10.6, which is lower than the industry average of 13.9. … While LICHSGFIN might seem like an attractive stock to buy, it is important to understand the assumptions behind the P/E ratio before you make any investment decisions. … See our latest analysis for LIC Housing Finance
Have Investors Priced In LIC Housing Finance Limited's (NSE:LICHSGFIN) Growth?
LIC Housing Finance Limited (NSE:LICHSGFIN) is considered a high-growth stock, but its last closing price of ₹428.65 left some investors wondering if this high future earnings potential can be rationalized by its current price tag. … What can we expect from LIC Housing Finance in the future. … According to the analysts covering the company, the following few years should bring about good growth prospects for LIC Housing Finance
How LIC Housing Finance Limited's (NSE:LICHSGFIN) Earnings Growth Stacks Up Against The Industry
Today I will take a look at LIC Housing Finance Limited's (NSE:LICHSGFIN) most recent earnings update (31 March 2018) and compare these latest figures against its performance over the past few years, as well as how the rest of the mortgage industry performed. … Did LICHSGFIN's recent earnings growth beat the long-term trend and the industry. … LICHSGFIN's trailing twelve-month earnings (from 31 March 2018) of ₹20.14b has
What Should Investors Know About LIC Housing Finance Limited's (NSE:LICHSGFIN) Growth?
Since LIC Housing Finance Limited (NSE:LICHSGFIN) released its earnings in March 2018,. … conservative, with earnings growth rate expected to be 14.46% next year, which is within range of the past five-year average earnings growth of 13.15% … Currently with trailing-twelve-month earnings of ₹20.14b, we can expect this to reach ₹23.05b by 2019
Should You Expect LIC Housing Finance Limited (NSE:LICHSGFIN) To Continue Delivering An ROE Of 15.74%?
and want to learn about Return on Equity using a real-life example. … With more debt, LICHSGFIN can invest even more and earn more money, thus pushing up its returns. … However, ROE only measures returns against equity, not debt.
Want To Invest In LIC Housing Finance Limited (NSE:LICHSGFIN) Today? Read This First
Growth expectations for LIC Housing Finance Limited (NSE:LICHSGFIN) are high, but many investors are starting to ask whether its last close at ₹495.85 can still be rationalized by the future potential. … See our latest analysis for LIC Housing Finance? … Investors in LIC Housing Finance have been patiently waiting for the uptick in earnings.
LIC Housing Finance Limited provides loans for purchase, construction, repair and renovation, etc. of houses/flats for individuals, corporate bodies, builders, and co-operative housing societies in India. The company offers finance on existing property for business or personal needs; loans to professionals for buying office space and equipment; and finance to individuals engaged in the business of construction and sale of houses or flats for residential purpose. It is also involved in setting up, running, and maintaining assisted living community center/care homes for senior citizens; marketing various financial products and services; and managing, advising, and administering mutual funds, unit trusts, and investment trusts. In addition, the company provides financial and investment advisory services; and acts as a trustee to venture capital trusts and funds. It markets its products through home loan agents, direct sales agents, and customer relation associates. As of March, 31, 2018, the company operated through a network of 9 regional offices, 23 back offices, 249 marketing offices, and 1 customer service point in India, as well as representative offices in Dubai and Kuwait. LIC Housing Finance Limited was founded in 1989 and is based in Mumbai, India.
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