LIC Housing Finance shares suffer sharp losses on weak Q2 results; here is what brokerages say

LIC Housing Finance (LICHSGFIN) shares gave in to selling pressure on Thursday after the non-banking financial company (NBFC) reported a weak set of quarterly results.

LIC Housing Finance shares suffered sharp losses on November 2 after the NBFC reported a weak set of Q2 results. | Image: Unsplash

LIC Housing Finance (LICHSGFIN) shares suffered sharp losses on Thursday after the Mumbai-based housing finance company reported a largely weak set of quarterly numbers with a 12.6 per cent fall in disbursements though its asset quality improved compared with the previous three months. The stock of LIC Housing Finance weakened by as much as Rs 16.7, or 3.6 per cent, to Rs 441.1 apiece on BSE, falling for a second straight session.

LIC Housing Finance Q2 earnings highlights

After market hours on Wednesday, the non-banking financial company (NBFC) reported a 3.9 times quarter-on-quarter increase in standalone net profit to Rs 1,188 crore for the July-September period that fell short of analysts' expectations. The company's net interest income (NII), the difference between interest earned and interest paid, increased 83.2 per cent to Rs 2,106.6 crore while its net interest margin (NIM), a key measure of profitability, contracted by 17 basis points (bps) to 3.04 per cent.

According to Zee Business research, LIC Housing Finance's quarterly net profit was estimated at Rs 1,225 crore and NII at Rs 2,150 crore.

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However, the NBFC's asset quality improved, as reflected in a sequential decline of 65 basis points in its gross non-performing assets (GNPAs) to 4.33 per cent of its total loans. The company's net non-performing assets (NNPAs) also decreased in the July-September period, to 2.59 per cent from 2.99 per cent of total loans in the June quarter.

LIC Housing Finance said its disbursements stood at Rs 14,665 crore for the quarter ended September 30, 2023, as against Rs 16,786 crore for the previous three months.

The company's total expenses increased 12 per cent, including an 18 per cent rise in finance costs.

The LIC Housing Finance management said demand remains robust as the overall economy is doing well along with stabilisation of interest rates.

How analysts say about LIC Housing Finance after the NBFC's Q2 earnings announcement

Brokerage	Rating	Price target	Upside/downside vs Wednesday's close
CLSA	Buy	Raised to Rs 575 from Rs 550	25.6%
Citi	Buy	Raised to Rs 535 from Rs 490	16.9%
Morgan Stanley	Equal-weight	Rs 450	-1.7%
Jefferies	Buy	Rs 505	10.3%

Jefferies maintained a 'buy' rating on LIC Housing Finance after the NBFC's earnings announcement with a price target of Rs 505, suggesting an upside of 10.3 per cent from the previous close.

The brokerage said the housing finance firm's quarterly net profit exceeded its expectations while its NIM brought a positive surprise.

With inputs from Reuters

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