Buy LIC Housing Finance; target of Rs 860: Motilal Oswal

Motilal Oswal is bullish on LIC Housing Finance has recommended buy rating on the stock with a target price of Rs 860 in its research report dated August 05, 2024.

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August 06, 2024 / 12:51 IST

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26 Aug, 2025 12:21

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Motilal Oswal's research report on LIC Housing Finance

LICHF's 1QFY25 PAT declined ~2% YoY to ~INR13b (in line). NII declined ~10% YoY to ~INR19.9b (8% miss). NII included NPA recoveries of INR900m (vs. INR2.3b in 4QFY24). Opex grew ~8% YoY to INR2.6b, and the cost-to-income ratio rose ~2pp YoY to ~13% (vs. ~11% in 1QFY24). PPoP at ~INR17.7b (8% miss) declined ~12% YoY. Reported yields and CoF stood at 9.8% and ~7.8%, respectively, leading to spreads of 2.1% (vs. 2.15% in 4QFY24). NIM dipped ~40bp QoQ to ~2.75%, partly due to lower NPA recoveries vs. 4QFY24. However, the management expects NIM to recover in the coming quarters and to be around 2.7%-2.9% in FY25. We estimate NIM of 2.9%/2.7% in FY25/FY26.

Outlook

LICHF’s valuation of ~1.0x FY26E P/BV reflects volatility in its provision cover and NIM profile, along with muted execution on loan growth. We estimate RoA/RoE of 1.6%/14% in FY26 and reiterate our BUY rating with a TP of INR860 (based on 1.2x FY26E BV).

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