On Monday, Axis Capital (NYSE:AXS) Limited adjusted its outlook on LIC Housing Finance (LICHF:IN), raising the price target to INR800.00 from the previous INR750.00. The firm maintains a Buy rating on the stock. The revision follows the company's first-quarter financial performance for the fiscal year 2025, where the Profit After Tax (PAT) reached Rs 13 billion. This figure represented a slight year-over-year decrease of 2% but showed a 19% increase from the previous quarter, surpassing estimates by approximately 17%.
The report noted that the higher-than-expected PAT was supported by reduced credit costs. Despite this, Net Interest Income (NII) experienced a decline, both year-over-year and quarter-over-quarter, by 10% and 11% respectively, and was about 9% lower than anticipated. This was attributed to reduced Net Interest Margins (NIM) and modest year-over-year growth of 4.4%.
Nevertheless, LIC Housing Finance demonstrated a solid performance in loan disbursements, which grew by approximately 19% year-over-year. The company also saw a rise in non-individual loans. Management has expressed confidence in maintaining double-digit growth and expects to continue the momentum in disbursements, particularly with an increased emphasis on non-individual loans.
The NIM, which stood at 2.76%, is expected to stabilize, with projections suggesting it will hover between 2.7% and 2.9%. In terms of asset quality, the company is reported to be largely stable, with ongoing resolutions in its legacy corporate portfolio.
Axis Capital has affirmed its estimates for LIC Housing Finance and increased the price target to INR800, which is based on 1.2 times the fiscal year 2026 estimated Price to Adjusted Book Value (P/ABV). The firm's endorsement of the Buy rating suggests continued confidence in the company's financial prospects.
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