Hold LIC Housing Finance; target of Rs 520: Prabhudas Lilladher

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Disbursements growth was steady in Q2 (+11.1% YoY), while loan growth was muted at 5% YoY, due to higher repayments.
  • Expect AUM growth of 6%/7% in FY27/28E, driven by diversification into higher-yielding LAP, LRD, self-employed borrowers, and project finance.
  • NIM to moderate to 2.6%/2.5% in FY27/28E, due to rising CoF and competitive pricing pressure.
  • Headline asset quality improved, with GNPA/NNPA at 2.05%/1.03%, and management expects a 7-10bps improvement in recoveries over current levels by FY27.

Thesis Validation Checklist

  • Monitor AUM growth and NIM trends over the next 12 months to validate the thesis.
  • Watch for signs of asset quality deterioration, particularly in the NHC segment.
  • Track the company's ability to achieve its guided disbursement growth and AUM growth targets.
  • Observe the impact of rising CoF and competitive pricing on NIM.
  • Monitor the progress of the company's strategic shift towards higher-yielding segments and its impact on profitability.