Neutral LIC Housing Finance; target of Rs 670: Motilal Oswal

Motilal Oswal's research report on LIC Housing Finance

LICHF’s 4QFY25 PAT grew ~25% YoY to ~INR13.7b (~7% beat). FY25 PAT grew ~14% YoY to INR54.3b. 4Q NII declined ~3% YoY to ~INR21.7b (~6% beat). The beat was primarily driven by NIM expansion of ~15bp QoQ, which in turn was aided by better surplus liquidity management and a ~10bp PLR hike taken by the company in 4Q. Fee and other income jumped 240% YoY to INR1.6b, primarily because of recoveries from the written-off accounts. Opex was elevated and grew ~18% YoY to INR4.5b and the cost-income ratio rose ~250bp QoQ to ~19.4% (PY: ~16.7% and PQ: ~16.9%). PPoP at ~INR18.8b (~8% beat) declined ~1% YoY. Reported yields in FY25 stood at 9.8% (9MFY25: 9.73%), while CoB declined to ~7.73% (9MFY25: 7.78%). This resulted in spreads improving to ~2.05% (9MFY25: 1.95%).

Outlook

We downgrade our rating on the stock to NEUTRAL with an unchanged TP of INR670 (premised on 0.8x Mar’27E P/BV).