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Informist, Thursday, May 8, 2025

By Sachi Pandey

MUMBAI - LIC Housing Finance Ltd. is likely to post a healthy profit growth for the March quarter, though pressures from slower disbursements and stable margins may weigh on the overall earnings. Brokerages expect a year-on-year jump in profit, but sequential numbers could reflect the impact of normalising provisions and softer loan growth. 

According to the average of estimates from 10 brokerages, the housing financier is seen posting a net profit of INR 13.37 billion, up 23% from a year ago but down 7% from the previous quarter. Estimates for the housing finance company's net profit ranged from INR 12.49 billion to INR 14.81 billion.

The company had reported an over 23% on-year increase in its net profit to INR 14.32 billion for the December quarter, largely on the back of an improvement in asset quality and a rise in total revenue from operations. 

The stock has moved up marginally by 1% since the announcement of the December quarter results. The shares have fallen nearly 11% in 2024-25 (Apr-Mar) and are down over 28% from the peak of INR 816.35 recorded on Jul. 1, 2024. At 1512 IST, LIC Housing shares were at INR 578 on the National Stock Exchange, up 3.7%. 

This time too, most brokerage firms expect asset quality to remain a key support for the housing financier. Gross non-performing assets are expected to remain stable with benign credit costs cushioning profitability. "PAT (profit after tax) growth will likely be elevated...due to one-off recovery on assets sold to ARC (asset reconstruction company)," Kotak Institutional Equities said. In the previous quarter, gross non-performing assets had fallen to 2.74% from 3.05% in the September quarter.

Provisions are expected to normalise after the sharp write-backs in December quarter. As on Dec. 31, total expected credit loss provision was at INR 49.74 billion. The technical write off was INR 1.74 billion in the previous quarter. Prabhudas Lilladher expects provisioning to normalise to about 19 basis points from a negative 2 bps of stressed assets in December quarter, partially weighing on sequential bottom-line growth.

Loan growth remains a key concern for LIC Housing Finance. Kotak Institutional Equities expects retail loan growth to stay low at 7% year-on-year, while JM Financial expects disbursement volumes to decline 3%, reflecting slower loan book expansion.

Margins are likely to remain steady. Elara Securities projects 11-basis-point sequential rise, even as quarter-on-quarter loan growth is seen at just 1.6%. Most brokerages expect net interest margins to stabilise near 2.7% as funding cost pressures ease.

The home loan company's net interest income is projected to fall 8% year-on-year to 20.55 billion, though it may rise 3% sequentially. Estimates for NII range between 19.91 billion and 21.42 billion. In the December quarter, net interest income had declined 5% year-on-year to INR 20 billion.

Operating expenses of the company could inch higher. Prabhudas Lilladher expects a 6% sequential rise in operating expenses.

While LIC Housing Finance's headline numbers may look healthy, brokerages are cautious about the sustainability of growth. The pace of disbursals and commentary on credit costs will be the triggers for the stock in the near term.

Following are the Jan-Mar earnings estimates for LIC Housing Finance based on reports from 10 brokerage firms in descending order by the estimate of net profit:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Vandana Hingorani

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