LIC Housing Finance Q3 Results Review - Soft Disbursement Growth; Asset Quality Improves: Nirmal Bang

Nirmal Bang Report

LIC Housing Finance Ltd.’s Q3 FY24 results were flat vs our estimates, aided by resilient net interest margins and controlled opex. NIM stood at 3.0% (higher than company guidance of 2.6%-2.8% in FY24).

Disbursements remained soft due to technological upgrades and management restructuring; company expects a loan book growth of ~10% in FY24 while we build in ~9%.

Asset quality improved significantly, with gross stage III reducing to 4.26% (versus 4.33% in Q2) driven by a concerted recovery effort. Expect additional resolutions to come through in Q4.

We maintain an 'Accumulate' rating on LIC Housing Finance; however ascribe a higher multiple of 1.1 times Dec 2025E adjusted book value per share resulting in a target price of Rs 620 (versus Rs 470 at 0.9 times Sept 2025E ABVPS earlier).

We expect assets under management to clock a compound annual growth rate of ~11% over FY23-FY25E and expect return on asset/return on equity at 1.6%/15.4% for FY25E.

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