LIC Housing Finance has strong moats in retail mortgages and on the liability side. It has demonstrated its ability to transmit higher borrowing costs to customers.

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Motilal Oswal Report

LIC Housing Finance Ltd. reported muted loan growth and disbursement growth during the quarter primarily due to the loss of business volumes in Bangalore and Hyderabad. Meanwhile, net interest margins remained broadly stable sequentially, while asset quality saw a healthy improvement. The company reported provision write-backs during the quarter, leading to a beat on earnings.

LIC Housing Finance has strong moats in retail mortgages and on the liability side. It has demonstrated its ability to transmit higher borrowing costs to customers. The company is making substantial efforts for a recovery in its project loans portfolio and anticipates more account resolutions moving forward.

LIC Housing Finance’s valuation of ~0.7x FY27E price/book value reflects the inability of the franchise to deliver stronger loan growth. We estimate RoA/RoE of 1.7%/14% in FY27 and maintain Buy rating with a target price of Rs 690 (based on 0.9x Sep’26E BV).

Key downside risks:

  1. an elongated period of weak loan growth because of muted demand or high competitive intensity; and

  2. volatility in the NIM profile and ECL provisioning.

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