According to experts, LIC Housing Finance Ltd. possesses robust buffers in both retail mortgages and the liability side. Additionally, the housing finance firm has proven its capacity to pass on higher borrowing rates to clients. A few brokerages reported that risk-reward is improving on the counter after their March quarter. For the company, analysts' price forecasts typically fall between Rs 600 and Rs 790.
According to Motilal Oswal, a decline in net interest margin (NIM) in FY25 may result from strong competition and less assistance from interest income recoveries. However, given that stressed exposures are being resolved and asset quality is continuing to improve, it forecasts much greater earnings predictability in LIC Housing Finance.
"Risk-reward is excellent at 0.9 times P/BV for FY26. Based on 1.1x FY26E P/BV, we maintain our Buy recommendation with a target price of Rs 790, according to Motilal Oswal. According to the brokerage, LIC Housing's pricing takes volatility in NIM and regular one-time charges into account. In FY26, it projected a return on equity (RoE) of 14% and a return on asset (RoA) of 1.6%.
Higher loan growth is necessary for LIC Housing to rerate, according to Prabhudas Lilladher. This firm kept its "Hold" recommendation in place after raising its target price for the company from Rs 540 to Rs 660.
Although the current liquidity constraint has kept borrowing costs high, Nirmal Bang stated that LIC Housing has been able to pass on the increase in benchmark rates to the final consumer. According to Nirmal Bang, it was able to renegotiate obligations at a reduced cost and recover the interest component upon the settlement of a few high-value instances in Q4.
"The company expects to maintain NIMs of 2.7-2.9 per cent in FY25; we expect NIMs to trend better with the expectation of a rate-cut in H2FY25," it stated.
This brokerage has revised its projections to account for increased NIMs and a notable improvement in asset quality. "We project a 13% compound annual growth rate (CAGR) for loan books between FY24 and FY26E, and 1.6% to 15% ROA/ROE for FY26E. Keep LICHF's ACCUMULATE rating intact, but assign a higher multiple of 1.2 times the March 2026 ABVPS, which would result in a target price of Rs 700, the report stated.
After adjusting its profit projections and rolling over the base to FY26E, Nuvama now has a target of Rs 605 as opposed to Rs 540.
At 0.9x BV FY26E, LICHF is still the most affordable company in our NBFC universe with little room for downside. Nonetheless, Nuvama stated, "We do not see upside triggers; 'HOLD' given high quarterly earnings volatility, soft loan growth, probable pressure on incremental NIM, and frequent accounting changes."
