Target: ₹660CMP: ₹652.50LIC Housing Finance saw a mixed quarter as NII missed PL expectation (PLe) by 12 per cent, which was offset by lower provisions at 20bps (PLe 61bps). LIC Housing Finance expects NIM to have bottomed out as share of higher yielding non-housing loans is targeted to improve in FY25 to 20 per cent from 13 per cent in FY24 and funding cost may ease. Management does not expect any further fall in NIM since share of higher yielding segments is targeted to increase in credit flow, while funding cost may ease up and ₹7,500 crore borrowings are likely to mature in Q2’25. However, considering the competitive intensity from banks, we are factoring a loan CAGR of 7% over FY24-26. Given RoA of 1.4-1.5 per cent, re-rating would hinge on better loan growth and stable earnings quality in terms of NII and provisions.

Source: The Hindu August 06, 2024 18:42 UTC