LIC Housing Finance Q1 Results Review — PL Capital Maintains 'Buy' On Attractive Valuations

While LIC Housing Finance maintained its double digit AuM growth guidance for FY26, the brokerage is cautious and factoring 7.2% AuM CAGR over FY25-27E since competition from banks would increase in a benign interest rate environment and preference is towards profitability over growth.

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PL Capital Report

LIC Housing Finance Ltd. saw a weak quarter as-

1. Net interest income missed our by 3.9% since net interest margin at 2.64% was lower to our estimate by 10bps,

2. disbursals at Rs 131 billion were 6.2% lesser and

3. stage-3 saw a 15bps QoQ blip leading to higher provisions at 25 bps (our estimate: 18bps).

Disbursal growth was muted due to slower pass thru of rate cuts compared to banks and lower demand post repo cuts.

While company maintained its double digit AuM growth guidance for FY26, we are cautious and factoring 7.2% AuM CAGR over FY25-27E since-

1. competition from banks would increase in a benign interest rate environment and

2. preference is towards profitability over growth.

While asset quality saw a blip for Q1 FY26, it seems transitory as most of the stress related risks have abated.

Company expects provisions to remain benign in FY26 at 9-15 bps (10bps in FY25). Valuation remains attractive at 0.8x; we keep multiple at 1.0x on FY27 adjusted book value and maintain target price at Rs 725. Retain ‘Buy’.

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