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Informist, Wednesday, Jan. 29, 2025

By Vaishali Tyagi

MUMBAI – Stable loan growth and steady disbursements are expected to support LIC Housing Finance's bottom line for the Oct-Dec quarter. The housing financier is seen reporting a net profit of INR 12.90 billion for the quarter ended December, up 11% on year, according to the average of estimates from nine brokerage firms. However, it is seen falling 2.9% on a sequential basis.

Estimates for the housing finance company's net profit were in the range of INR 12.20 billion to INR 14.15 billion. Shares of the company ended 0.7% higher at INR 574.60 on the National Stock Exchange on Wednesday. The company's net profit for Jul-Sept had risen 11.9% on year to INR 13.29 billion, primarily because of a fall in total expenses and lower non-performing assets.

Brokerages expect the lender to see a steady increase in disbursements in Oct-Dec, which will aid the bottom line. During Jul-Sept, total disbursements by the company grew 12% on year to INR 164.76 billion. Out of this, the disbursements in individual home loan segment were at INR 130.51 billion as of Sept. 30, whereas the project loan jumped up 223% to INR 13.97 billion from INR 4.3 billion a year ago. "Disbursal run-rate of LICHF (LIC Housing Finance) is the key monitorable given weak credit flows in the last few quarters," Prabhudas Lilladher said in its report.

The loan growth of the company is expected to remain around 7% on year for the reporting quarter. The total loan portfolio of LIC Housing Finance stood at INR 2.95 trillion as of Sept. 30, a growth of 6% on year. In the previous quarter, the company had said that it would focus on expanding its wholesale lending portfolio as part of their growth strategy. 

Brokerages expect a slight moderation in the net interest margin on a rising cost of funds, but Kotak Institutional Equities expects the margin to remain stable as they believe that the cost of borrowing has peaked out. Net interest margin for the Jul-Sept quarter was 2.71% and 3.00% in Oct-Dec 2023.

Despite the rise in net profit, net interest income of the non-bank finance company is expected to fall 4.1% on year to INR 20.11 billion, according to the estimates. The company's net interest income for Jul-Sept fell by 6% to INR 19.74 billion, from INR 21.07 billion in the corresponding period a year ago. LIC Housing Finance's management in the previous quarter had said that it would focus on boosting assets under management to increase net interest income. 

The company is scheduled to detail its earnings on Friday. Commentaries on mortgage demand, asset quality, and guidance on margins and loan growth are the key monitorables, brokerages said. Following are the Oct-Dec earnings estimates for LIC Housing Finance based on reports from nine brokerage firms in descending order by the estimate of net profit:

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Edited by Akul Nishant Akhoury

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