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Informist, Tuesday, Oct. 28, 2025

 

By Kabir Sharma

 

MUMBAI – LIC Housing Finance Ltd. is expected to report negligible on-year growth in its net profit for the September quarter as a steady rise in loan growth is seen offsetting the fall in net interest margin, according to brokerages tracking the lender. The home loan provider, which struggled with high provisions in the June quarter, is scheduled to release its earnings on Wednesday.      

 

The housing financier is expected to report a net profit of INR 13.60 billion for the quarter ended September, a mere 1.4% growth over last year, according to estimates from nine brokerage firms. Sequentially, the bottom line, which was dragged to a four-quarter low in June by surging provisions, may fall further due to a contraction in margins, according to brokerages. Nuvama Wealth Management had the highest estimate for net profit at INR 13.80 billion and PL Capital had the lowest at INR 12.95 billion.

 

Mimicking the sequential decline in net profit, shares of the company have fallen 1.4% from the date it reported earnings for the June quarter. The stock is down over 11% from its 52-week high. At 1238 IST, LIC Housing Finance's shares traded over 0.3% higher at INR 585.85 on the National Stock Exchange.           

 

"We expect LIC HF (LIC Housing Finance) to report 9% year on year growth in disbursements and loan growth of 7%," Kotak Securities Ltd. said in a note. Motilal Oswal Financial Services also expects the loan growth to be near 7%. For the June quarter, loan growth was 7%, while disbursements growth was just 2%. 

 

Brokerages were also of the view that the net interest margin of the non-bank lender for the September quarter will be lower than last quarter due to repo rate cuts by the Reserve Bank of India. PL Capital expects the net interest margin for the reporting quarter to be lower by 8 basis points from the June quarter. LIC Housing's net interest margin had contracted 8 bps in the June quarter as well, compared to the corresponding quarter of last year. 

 

As a result of the fall in the net interest margin, the net interest income is seen rising by just 5.6% on year and is expected to remain largely unchanged from the previous quarter. According to the average of estimates from nine brokerages, LIC Housing Finance's net interest income is seen at INR 20.66 billion for the reporting quarter.   

 

The lender's net interest margin is also expected to narrow further as the speed at which the yield on advances fell was higher than the slow pace at which cost of funds fell for the lender. This was primarily due to slower repricing of bank loans--which is the major source of funds for LIC Housing--compared to the relatively faster repricing of the home loans it gives.

 

The asset quality of the lender is expected to remain stable in the reporting quarter. While the gross non-performing asset ratio is expected to improve by 10-12 bps, the credit cost is seen stable at around 25 bps, brokerages said. In the June quarter, LIC Housing Finance's net non-performing asset ratio improved to 1.30% from 1.68% a year ago, while the gross non-performing asset ratio improved to 2.62% from 3.29% in the year-ago quarter. The company's provision coverage ratio in the June quarter was 50.92%, slightly higher than 49.79% in the year-ago quarter.

 

Among key things to watch will be the management's commentary on mortgage demand and guidance on margins and loan growth, the brokerages said. Of the 13 brokerage reports on the lender available with Informist, eight have a 'buy' rating with an average target price of INR 717. Four brokerages have a 'hold' rating with an average target price of INR 635, while one brokerage has a 'sell' rating with a target price of INR 645.

 

Following are the Jul-Sept earnings estimates for LIC Housing Finance from nine brokerage firms in descending order by the estimate of net profit: 

 

Brokerage	Net interest income (in INR million)	Net profit (in INR million)
Nuvama Wealth Management Ltd	20,700	13,800
ICICI Securities Ltd	20,170	13,668
JM Financial Institutional Securities Pvt Ltd	20,793	13,616
Nirmal Bang Equities Pvt Ltd	20,946	13,608
YES Securities (India) Ltd	21,602	13,542
Elara Securities (India) Pvt Ltd	22,516	13,506
Kotak Securities Ltd	20,758	13,304
Motilal Oswal Financial Services Ltd	19,926	13,228
Prabhudas Lilladher Pvt Ltd	20,252	12,953
Average	20,657	13,599.20

 

End

 

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

 

Edited by Tanima Banerjee

 

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