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Nirmal Bang Report
LIC Housing Finance Ltd. Q2 FY24 results were higher than our estimates on account of strong net interest margin and lower opex. NIM stood at 3.04% (higher than company guidance of 2.6%-2.8% in FY24).
Disbursements normalised in the quarter to ~Rs 146.6 billion (+35% QoQ) after a muted Q1 and the company is confident of achieving loan book growth of ~10-12% in FY24.
Asset quality improved significantly, with gross stage III reducing to 4.33% (versus 4.96% in Q1) driven by concerted recovery effort.
We expect assets under management to clock a compound annual growth rate of ~11% over FY23-FY26E and expect return of assets/return of equity at 1.4%/13.7% for FY25E.
We maintain our 'Accumulate' rating on LIC Housing Finance with a target price of Rs 470 (0.9 times September 2025E adjusted book value per share).
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