Prabhudas Lilladher has given LIC Housing Finance a 'Hold' rating and set a target price of Rs 675 in their latest research report dated October 29, 2024.

The report states that LIC Housing Finance had a mixed performance, with net interest income (NII) falling short of expectations by 5% due to a decline in net interest margin (NIM), which decreased by 5 basis points quarter-on-quarter. However, lower provisions and an increase in other income helped to mitigate this.

The company believes that NIM has reached its lowest point and attributes this to factors such as an increase in the share of higher-yielding non-housing loans (NHL) in disbursals, which is expected to reach 20% by the end of FY25. Yields in prime and super-prime segments have also risen, and there is a shift in the loan mix towards higher-yielding products. Despite maintaining a double-digit loan growth guidance for FY25, the report anticipates a 7.5% loan compound annual growth rate (CAGR) from FY24 to FY27 due to competition from banks and larger housing finance companies. The outlook remains cautiously optimistic, with a focus on improved loan growth and stable earnings quality.