LIC Housing Finance Q4 Results Review: Attractively Priced Stock, Says Nirmal Bang, Maintaining 'Buy'

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Nirmal Bang Report

LIC Housing Finance Ltd.’s Q4 FY25 reported set of numbers for net interest income / pre-provision operating profit were in line with our estimates (2.9% / -0.3%). PAT was at a variation of -2.9% vs our estimates due to higher than estimated provisions.

Disbursements grew by 24% QoQ / 5% YoY with broad-based growth across regions except for the east which forms a smaller part of loan book. The company has guided for a double-digit AUM growth in FY26 and we build in a growth rate of 12% for FY26.

Q4 FY25 net interest margins improved by 16bps QoQ to 2.86%. We expect NIMs to be under pressure due to competition from other banks and NBFCs and the current volatile interest rate scenario. We expect NIMs to be 2.7% in FY26.

Asset quality trend improved; expect additional resolutions to come through in FY26.

We have estimated loan / earnings CAGR of 12% / 10% in FY25-FY27E resulting in RoA /RoE of 1.8% /14.9% in FY27E. Roll forward our valuation to Mar’27 with a multiple of 1x adjusted book value per share (same as earlier) resulting in a target price of Rs 781.

Our target multiple is at a 12.6% discount to past five-year average multiple of 1.1x. Maintain Buy as the stock is attractively priced.

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