LICHF saw a soft quarter as loan growth at 5.8% YoY (PLe 7.0%) disappointed yet again due to 2.5% miss on disbursals and 25% higher repayments; this was partly offset by better asset quality and steady NIM. BT-out was much higher at Rs40bn (run rate Rs20-22bn), as customers in HL segment shifted to PSU banks for better rates. Company has not seen double-digit loan growth since the past 11 quarters due to preference for NIM over growth. We cut loan growth for FY26 by 163bps to 5.4% and are watchful of H2FY26 as banking sector data suggests that housing credit growth is improving indicating more competition for HFCs. While company is optimistic on margins, higher repayments exposes NIM to downside risk due to benign interest rates.
OutlookDue to sustained lower growth, we lower multiple to 0.8x from 1.0x and reduce TP to Rs 690 from Rs725 while we roll forward to Sep’27 ABV. Revise rating to ‘HOLD’ from ‘BUY’.
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