What Jefferies Thinks About LIC Housing Finance After Q2FY26 Results
About LIC Housing Finance
LIC Housing Finance Ltd (LIC HFL) is one of India’s largest mortgage lenders, backed by Life Insurance Corporation of India. The company provides loans for housing, construction, and related purposes. Its vast retail network and strong parentage make it a key player in India’s housing finance ecosystem. However, the competition from banks and new-age NBFCs has intensified, pushing analysts to closely watch its margins and growth trajectory.
Jefferies’ Q2FY26 Review and Insights
Jefferies has reaffirmed its ‘Buy’ rating on LIC Housing Finance, setting a target price of ₹635. The brokerage noted that the company’s Q2FY26 results were largely in line with expectations, with PAT at ₹13.5 billion — a modest 2% YoY rise. The Net Interest Income (NII) fell slightly short, but the impact was offset by lower operating expenses and improved asset quality.
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| Metric | Q2FY26 | YoY Change |
|---|---|---|
| PAT | ₹13.5 Bn | +2% |
| AUM Growth | 6% | Stable |
| NIM | 2.6% | -5 bps QoQ |
| GNPA | 3.1% | -11 bps QoQ |
| Credit Cost | 22 bps | Higher vs est. 14 bps |
Peer Comparison & Valuation Metrics
LIC Housing Finance trades at an attractive valuation compared to its peers. While its growth rate lags slightly behind faster-growing NBFCs, its risk-adjusted return profile remains solid, supported by a conservative lending model and improving asset quality.
| Company | P/E (x) | P/B (x) | ROE (%) | 1-Yr Return (%) |
|---|---|---|---|---|
| LIC Housing Finance | 8.2 | 1.0 | 13.5 | 22 |
| HDFC Ltd (merged) | 18.4 | 2.9 | 16.1 | 31 |
| PNB Housing | 9.5 | 1.1 | 12.4 | 19 |
SWOT Analysis
| Strengths | Weaknesses | Opportunities | Threats |
|---|---|---|---|
| Strong brand and parentage via LIC, extensive network. | Slower loan growth vs peers due to conservative risk approach. | Expanding affordable housing and government subsidy schemes. | Rising funding costs and competition from private banks. |
Investment Verdict
LIC Housing Finance appears fairly valued, trading at ~1x book with improving NPAs and steady profitability. Jefferies’ confidence in maintaining a Buy rating stems from stability in spreads and ongoing cost rationalization. The brokerage expects a 12–13% RoE recovery over the next two years, supported by retail housing demand.
Verdict: Suitable for medium- to long-term investors with a 12–24 month horizon, targeting steady compounding rather than aggressive returns.
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Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Registered Investment Adviser, notes that LIC Housing Finance’s fundamentals remain robust and the worst of margin compression seems behind. Investors can consider staggered accumulation on dips, prioritizing dividend yield and balance sheet quality.
Discover more insights at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on Housing Finance Stocks
- Is LIC Housing Finance still undervalued after its Q2 results?
- Which housing finance stock offers better long-term growth?
- What are the risks to margins for home loan NBFCs in FY26?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
