Prabhudas Lilladher's research report on LIC Housing Finance
LICHF saw a mixed quarter as NII missed PLe by 12%, which was offset by lower provisions at 20bps (PLe 61bps). NIM declined by 37bps QoQ due to (1) lower interest on recoveries on account of softer collection efficiency led by seasonality, and 2) repricing pressure, especially on higher priced loans, due to competitive intensity. LICHF expects NIM to have bottomed out as share of higher yielding non-housing loans is targeted to improve in FY25 to 20% from 13% in FY24 and funding cost may ease. Double-digit loan growth guidance has been maintained for FY25E. However, we are factoring 7% loan CAGR over FY24-26E due to competition from banks and large HFCs.
Outlook
Given RoA of 1.4-1.5%, re-rating would hinge on better loan growth and stable earnings quality in terms of NII and provisions. We maintain multiple at 1.0x on Mar’26 ABV and TP at Rs660. Retain ‘HOLD’.
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