ICICI Securities research report on LIC Housing Finance
LIC Housing Finance (LIC HF) continues to feel the heat from increasing competition, as reflected in AUM growth remaining subdued at 7% YoY / 1% QoQ and asset yield reducing 20bps YoY / QoQ to 9.6% in Q1FY26. However, NIM expanded 3bps YoY driven by a 26bps YoY dip in cost of funds to 7.5%, offsetting the adverse impact of yield contraction on NIM in Q1. Incremental yields were lower by 50bps at 8.9%, while cost of funds was down 69bps QoQ to 6.97%; hence, it expects NIM to sustain at the current level of 2.1%. Credit cost in Q1 inched up to 25bps vs. the guided range of 9-15bps in FY26.
Outlook
We believe increased competition in prime housing post rate cut would keep growth and earnings muted for LIC HF in the near term. Maintain SELL with an unchanged TP of INR 500, valuing the stock at 0.6x Sep’26E BVPS.
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