Synopsis: LIC Housing Finance is showing signs of recovery as Citi expects stronger Q4 disbursements, easing balance transfer pressure and over 6% AUM growth in FY26. Loan repricing, stable asset quality and upcoming strategic initiatives such as co-lending and fintech tie-ups suggest the housing finance company may be entering a better growth phase.
LIC Housing Finance is drawing attention after Citi highlighted improving business momentum following a subdued third quarter. The brokerage expects double-digit Q4 disbursement growth, easing balance transfer pressure and exit FY26 AUM growth above 6%. Along with loan repricing, margin stability and steady asset quality, these trends have raised hopes that the company could be headed toward better days.
With a market cap of Rs 27,300 crore, the shares of LIC Housing Finance Ltd are trading at Rs 496 and are trading at a PE of 4.9 compared to their industry PE of 12.4. The shares have given a return of more than 6,200% since 1999.
The growth outlook improves
LIC Housing Finance might be showing early signs of a better growth phase, based on Citi’s latest management meet takeaways. After a sluggish third quarter in which assets under management grew merely 5% year-on-year, the company is now expecting better times ahead, with exit numbers for FY26 AUM growth coming in above 6%. A big reason for this optimism is the company’s expectation of double-digit disbursement growth in the fourth quarter, which is a good sign of improving times ahead.
The fourth quarter disbursement trend is important because this comes at a time when balance transfer pressures are easing out. Citi had noted that LIC Housing was witnessing lower balance transfer-related stress, which is a good sign for the company to retain its customers and sustain better portfolio growth. If this trend continues, better loan growth in Q4 might be an early sign of better times to come for LIC Housing Finance.
Another key aspect is the company’s active repricing strategy. Since October, LIC Housing has repriced loans worth Rs 365 billion with lower rewriting rates and better balance transfer management. This is likely to help control the BT out rate, which is a significant aspect of the company’s performance, as high balance transfer rates often impact visibility of growth in a competitive market, especially in the housing finance segment.
The company is matching its front-end home loan pricing with lower rates of 7.15%, while still trying to maintain its margins. Citi noted that LIC Housing is focusing on maintaining its net interest margin, with a boost from a change in loan mix to non-home loan products and lower funding costs. This shows that the company is not trying to grow blindly but is trying to build momentum without affecting profitability.
What supports the recovery view
On the asset quality front, too, the outlook seems relatively stable in the near term. Citi has stated that the retail book seems steady, and resolution in the corporate book could provide provisioning upside. Also, normalisation in the GS3 is expected in FY27, which gives some comfort that any improvement in growth in the near term may not be at the cost of a sharp deterioration in credit quality.
However, in addition to the near-term trends in Q4, there are structural changes that LIC Housing is contemplating that could provide a fillip to growth in the future as well. The company is planning to appoint senior consultants for an end-to-end review of its organisational structure, including affordable housing dynamics as well. This indicates that the company’s management is not just focused on near-term quarter-on-quarter recovery and may be contemplating a more robust growth model for the company in the future as well.
There are other growth drivers in the pipeline for the company as well from FY27 onwards, such as a distribution reset, a co-lending model, and fintech tie-ups. All these factors point towards the fact that LIC Housing Finance may indeed be moving towards better days ahead.
Financials
The revenue from operations for the company stood at Rs 7,209 crore in Q3 FY26 compared to the Q3 FY25 revenue of Rs 7,070 crore, up by about 2 per cent YoY. However, the net profit stood at Rs 1,398 crore in Q3 FY26, down compared to the Rs 1,435 crore profit in Q3 FY25.
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