LIC Housing Finance reported a mixed second quarter for fiscal 2027, with earnings per share of 25.10 compared with the 25.34 analyst estimate. Revenue reached 21.78 billion rupees, slightly above the 21.69 billion forecast. Shares rose 1.24% to 499.8 rupees from 493.7 rupees after the results, indicating a cautious positive market reaction.
Profit before tax increased 13% year on year to 19.19 billion rupees, while profit after tax rose 11% to 15.09 billion rupees. Revenue from operations grew 1.4% to 71.75 billion rupees, and net interest income increased 2.5% to 20.88 billion rupees.
The lender’s outstanding loan portfolio stood at 326,173 crore rupees as of September 30, up 5% from a year earlier. The retail portfolio increased 4% to 316,433 crore rupees, while project loans rose 12% to 9,740 crore rupees.
Total disbursements reached 18,127 crore rupees, an 11% year-on-year increase and a 21% rise from the first quarter. Retail disbursements grew 10% to 17,563 crore rupees, while project-loan disbursements increased 49% to 564 crore rupees.
Net interest margin was 2.58%, unchanged from the previous quarter but below the 2.62% recorded a year earlier. Management said the margin remained stable despite an elevated interest-rate environment. The company’s cumulative cost of funds was 7.29% at the end of September, compared with 7.42% a year earlier, while incremental borrowing costs declined sequentially to 6.91% from 7.06%.
Asset quality also improved. Stage 3 exposure fell to 2.05% from 2.51% a year earlier. Total provisions stood at 4,292 crore rupees, representing a 49% provision coverage ratio on Stage 3 assets. The company reported 553 crore rupees of recoveries during the quarter, along with 84 crore rupees recovered from written-off accounts.
Management is pursuing growth through a broader product mix and a larger sales network. The company has more than 8,000 active direct selling agents and is increasing its focus on self-employed borrowers, loans against property and project finance. It aims for loans against property to represent 20% of sales during the fiscal year, while non-housing individual loans are expected to account for 17% to 20% of disbursements.
LIC Housing Finance reiterated its target of 12% to 14% growth in assets under management for FY27 and expects full-year disbursement growth of about 15%. It is seeking to maintain net interest margin between 2.5% and 2.6%. The company raised its benchmark lending rate by 25 basis points from October 31 and expects higher bank borrowing costs to add around 10 basis points to funding costs by year-end.
The lender expects credit costs of 7 to 10 basis points by the end of the year, supported by recoveries and planned resolutions in project loans. Management said two project cases are scheduled for resolution during the second half of the fiscal year.
During the earnings call, executives acknowledged that prepayments remain elevated, partly because some borrowers are moving to banks offering repo-linked products. This has caused asset growth to trail disbursement growth. The company has established a retention team and said it expects the gap to narrow as those efforts develop.
Management also said it is taking a more selective approach to project finance, focusing on smaller loans, tighter underwriting and stronger security coverage. Regarding exposure to the Zee Group, the company reported approximately 1,365 crore rupees across two loan accounts; one is fully provided and the other is 75% provided. Recovery efforts are continuing through legal channels and asset sales.
The company reported a return on equity of 14% and a capital adequacy ratio of 25.48%. Management said the capital position could provide room for additional shareholder-return measures in the future. It also noted that a 500% dividend had been declared, equivalent to 10 rupees per share on a 2-rupee face value.
Sources: Investing.com News.