Reduce LIC Housing Finance; target of Rs 395 : HDFC Securities

HDFC Securities recommended reduce rating on LIC Housing Finance with a target price of Rs 395 in its research report dated August 04, 2023.

Broker Research

August 09, 2023 / 11:57 IST

Reduce

26 Aug, 2025 12:21

Volume

Todays L/H

HDFC Securities' research report on LIC Housing Finance

LICHF’s Q1FY24 earnings were significantly ahead of our estimates on the back of sharper-than-expected reflation in NIMs, despite sub-par AUM growth (+8% YoY) and asset quality. NIMs reflated sharply for a second consecutive quarter (+28bps QoQ) to 3.2% (Q4FY23: 2.9%), primarily driven by asset repricing and liquidity management. GS-II/GS-III clocked in at 5.8%/5%, implying negligible collections in the softer buckets, while individual home loan GNPA were at 2.2%. Loan growth continues to be tepid (8% YoY), on the back of a sharp fall in disbursals (-29% YoY), exacerbated by business throughput disruptions from the ongoing tech transformation. LICHF is likely to continue facing a trade-off between growth and margins in an elevated competitive intensity environment, while the margin gains are likely to reverse themselves through the rest of FY24.

Outlook

We revise our FY24/FY25 earnings estimates upwards to adjust for stronger NIMs; maintain REDUCE, with revised TP of INR395 (0.8x Mar-25 ABVPS).

For all recommendations report, click here