LICHSGFIN Q2 FY25 earnings call.
A source-linked concall view: reported numbers, management language, guidance, commitments and risks that should carry forward.
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Revenue
₹6,926 Cr
verified against source
Revenue YoY
3%
reported change
EBITDA
Pending
latest reported figure
Source
screener in partial
record provenance
Actual signal trajectory
Where this quarter sits.
Quarter read
What the record says.
LIC Housing Finance delivered Q2 FY25 with PAT of INR 1,328.89 crores, up 12% YoY, driven by a INR 66 crore sequential reduction in provisions. Revenue from operations grew modest 3% to INR 6,926 crores while NIMs compressed 33bps YoY to 2.71%, reflecting the low-cost funding environment and competitive pricing in the prime home loan segment. Stage 3 assets improved materially to 3.06% from 4.33% YoY, though this partly reflects INR 286 crore technical write-offs. Disbursement growth accelerated to 12% YoY (INR 16,476 crores), with developer finance disbursements surging 223% to INR 1,397 crores after six quarters of degrowth. Management affirmed double-digit AUM growth guidance while launching a new self-employed affordable product priced 250bps above standard home loans, targeting 15-20% book contribution over 2-3 years. Margin outlook: management expects 5-10bps NIM improvement in H2, having indicated 2.7%-2.9% full-year guidance. Key risk: yield compression of ~27bps in H1FY25 despite rate environment, and potential asset quality deterioration if developer financing accelerates beyond selective quality developers (BBB+ rating threshold).
Colored figures show movement against the previous available record.
Guidance to track
- Management reiterated guidance for double-digit loan portfolio growth, with potential 12-15% if PMAY affordable segment traction exceeds expectations. Currently at 6% growth but expects H2 seasonal strength (festive quarter + Q4) to close the gap.
- Management explicitly stated they have 'hit the bottom' on margins. NIM improvement expected from: (1) wholesale book growth at ~10.5% annualized yield, (2) new affordable self-employed product at +250bps versus standard home loans, (3) CIBIL-based pricing granularity changes, (4) 3bps sequential cost of funds reduction benefit still flowing through.
- Developer loan portfolio currently at 3% (approximately INR 8,838 crores). Management targets 4% by March 2025 and 5-6% over next 12 months, maintaining triple-B or higher external rating requirement for all new disbursements.
- New product launched 20 days prior to call, priced ~250bps above standard home loans, targeting CIBIL/no-document self-employed borrowers. Management acknowledges higher risk but states pricing adequately compensates. Expects 'cautious' growth trajectory as capabilities are built.
Risks flagged
- Analyst questioned 27bps yield decline in H1FY25 despite industry rates rising and minimal portfolio mix change. CFO attributed to growth focus over margins and portfolio rebuilding after prior year underperformance. No clear floor identified for yield stabilization beyond NIM guidance.
- Analyst flagged stage 2 provision coverage ratio declining from 7% to 4% YoY. CFO attributed this to completion of OTR (one-time restructuring) post-COVID, which had required elevated provisions despite performing status. However, PCR trajectory if portfolio stress emerges could be inadequate.
- Liabilities reprice immediately (banking) or month-end (T-bill), while assets reset only quarterly (first of quarter). Management acknowledged ~50% of liabilities will reprice faster than 90-95% of assets, creating potential margin pressure in rate cut scenarios rather than benefit.
- Management accelerating developer lending after six quarters of caution, targeting INR 1,500+ crores quarterly disbursements. Despite BBB+ rating requirement, historical project finance NPA remains elevated at 30.13%. Single-lien security does not guarantee resolution speed given IBC delays and multiple stakeholder interests.
Key quotes
- We have hit the bottom. We are pretty sure of that. And in the coming quarter three and quarter four, I expect a 5-10 basis point improvement.
- Growing the book is important, but growing the book with better margins is more important. We cannot junk one for the other. I cannot be saying that I'll be looking only at margins and completely forget about growth, and at the same time, I cannot be saying that I look only at growth and not look at margins.
- Our loans are not linked to any external benchmark, but we understand if there is a repo cut, there will be improvement in the cost of fund. To that extent, there could be a situation open for passing on a reduction to the customers, but that is not a one-to-one kind of a correlation.
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