LICHSGFIN Q2 FY26 earnings call.
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Revenue
₹7,163 Cr
verified against source
Revenue YoY
3%
reported change
EBITDA
Pending
latest reported figure
Source
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record provenance
Actual signal trajectory
Where this quarter sits.
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What the record says.
LIC Housing Finance reported a muted Q2 FY26 with flat sequential growth despite seasonal tailwinds. Revenue from operations stood at INR 7,163 crore (up 3% YoY), while PAT at INR 1,353.87 crore grew just 2% YoY. The NIM compression to 2.62% (from 2.71% in Q2 FY25) reflects the deliberate trade-off management made to protect spreads over volume growth. Balance transfers of INR 4,014 crore (vs. normal INR 2,000 crore run rate) disproportionately impacted disbursements; the company reduced rewriting rates to 8% (from 8.75%) to stem attrition. Disbursements grew 24% QoQ in Q2, suggesting Q3-Q4 acceleration is plausible. Asset quality improved with Stage 3 at 2.51% (vs. 3.06% YoY), and three large loan resolutions are expected in H2. Growth remains the key concern—at 6% YoY book growth, the company is trailing its own double-digit guidance and peers. Management acknowledged this is a strategic priority, with a consultant being engaged to evaluate structural and distribution changes.
Colored figures show movement against the previous available record.
Guidance to track
- Management maintained guidance for ~10% growth in both disbursements and loan book for FY26, despite H1 delivering only 6% growth. Expects Q3 and Q4 (traditionally strong quarters) to drive acceleration, citing 24% sequential disbursement growth in Q2 as a green shoot.
- Management believes 2.62% is the bottom for NIM, with further compression unlikely. Expects cumulative cost of borrowing to decline another 5-6bps in Q3 as fixed-rate NCD maturities (INR 14,000-15,000 crore) are repriced at current lower rates.
- Despite H1 disbursements of only INR 156 crore (vs INR 1,397 crore in H1 FY25), management reaffirmed the INR 5,000 crore full-year target. Average yield on project finance improved to ~12% (vs 10.35% last year), reflecting selective, high-margin approach.
- Direct lead channel (aggregated online/offline leads) crossed INR 750 crore in H1 vs INR 800 crore for entire FY25. This zero-commission channel is expected to contribute INR 2,000 crore in FY26, reducing agent-dependency (currently 87% of business).
Risks flagged
- BT outs doubled to INR 4,000 crore in Q2 (vs INR 2,000 crore run rate), causing approximately INR 2,000 crore of book erosion. While October data shows normalization, any further rate differential with PSU banks (offering 7.35-7.50%) could trigger renewed outflows at the 8% rewriting rate floor.
- H1 construction finance disbursements of INR 156 crore represent a INR 900+ crore shortfall vs H1 FY25. While yield improved to 12%+, the pipeline of INR 4,000+ crore undisbursed sanctions must convert in Q3-Q4 to meet the INR 5,000 crore annual target—execution risk is elevated.
- PSU banks are offering home loans at 7.35% and construction finance at near-retail rates, creating persistent pricing pressure. Management has drawn a line at protecting margins over volume, but this structural constraint could limit market share recovery if sustained. The CEO explicitly deferred addressing this in analyst Q&A.
- 87% of business flows through third-party agents who are freelancers distributing across multiple lenders. Management acknowledged this structural vulnerability but deferred structural changes to the ongoing 3-6 month consultant review, creating near-term growth ceiling.
Key quotes
- This year is going to be a difficult year for us because we would be required to balance our growth of book, growth of disbursement with the NIMs and the spreads. We would prefer to protect my margins and NIMs rather than going for growth of business at which is not very profitable to the company.
- My incremental cost of borrowing is 6.73% for Q2 FY2026. We expect another 5-6 basis points compression in Q3, which will translate into better NIM. I do not see any reason why there should be any compression on NIMs any further. 2.62% is the bottom of the curve.
- The balance transfer challenge is now over. As witnessed in October of Q3, the balance transfers are at lower levels compared to June through September of Q2. At 8% roughly we should be able to retain much, much more as compared to what went out.
- This is one question which has been bothering me. Yes, I do agree that growth of 7-8% is not acceptable at all. We need to look at ways and means of coming to somewhere around probably 13%, 14%, and I think that is doable with a little bit of structural changes.
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