Summary
LIC Housing Finance Limited - Q3 FY2026 Earnings Call Summary Monday, February 02, 2026, 11:00 AM
Event Participants
Executives 3 Lokesh Mundra (CFO), Praveen Agarwal (Moderator - Axis Capital), Tribhuwan Adhikari (MD & CEO)
Analysts 6 Gaurav (JP Morgan), Kunal Shah (Citigroup), Nischint Chawathe (Kotak), Nishit Shah (ViSolitech Investment Advisor), Sanket Chheda (Dam Capital), Sonal Minhas (Prescient Cap Investment Advisors)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Disbursements | ₹16,096 crores | +4% YoY; Individual home loans grew 7% YoY to ₹13,094 crores. |
| Outstanding Loan Portfolio | ₹3,14,268 crores | +5% YoY; Individual home loans comprise 85% of total book. |
| Revenue from Operations | ₹7,187 crores | +2% YoY; Growth tempered by intense competition and rate wars. |
| Net Interest Income (NII) | ₹2,102 crores | +5% YoY and +3% QoQ; Driven by lower funding costs. |
| Net Interest Margin (NIM) | 2.69% | -1 bp YoY, +7 bps QoQ; Rebounded from Q2 lows due to better cost management. |
| Profit After Tax (PAT) | ₹1,383.95 crores | -3.4% YoY; Previous year benefited from a ₹250 crore one-off corporate resolution. |
| Stage-3 Exposure (GNPA) | 2.45% | -30 bps YoY, -6 bps QoQ; Improvement seen across retail and project segments. |
| Provision Coverage Ratio | 54% | Based on total provisions of ₹5,105 crores for Stage-3 assets. |
| Cost of Funds | 7.28% | -45 bps YTD from 7.73% in March 2025; -14 bps QoQ. |
| Capital Adequacy (CAR) | 24% | Robust capital position; Management sees no need for infusion for 2-3 years. |
Geographic & Segment Commentary
- Individual Home Loans (IHL): This segment comprises 85% of the total portfolio and grew 4% YoY. Management noted intense competition from banks in the salaried class segment, leading to a “rate war” and pressure on disbursement growth.
- Other Home Loans (OHL/LAP/LRD): Now accounts for 15% of the book, up from 12% previously. This segment provides 150-200 bps higher margins than traditional home loans and is a key area for strategic diversification.
- Project Loans (Corporate): Outstanding Stage-3 exposure in this segment is ₹3,416 crores. While resolution is slow due to legal stalling by big builders, management is actively pursuing NCLT/DRT routes and expects potential “cracks” or resolutions in Q4.
Company-Specific & Strategic Commentary
- Structural Transformation: The company is onboarding a “Big Four” or IIM consultant in February 2026 to overhaul marketing verticals, compensation structures (moving toward performance-linked pay), and digitization DNA.
- Rate Competitiveness: Reduced new home loan rates to 7.15% (effective Dec 22, 2025), matching the lowest in the industry to counter bank competition.
- Loan Rewriting Strategy: To prevent balance transfers (BT-out), the company offered existing customers rewriting options at fresh lending rates plus 50 bps, reducing BT-out from ₹4,014 Cr in Q2 to ₹3,300 Cr in Q3.
- LIC Synergy: Management is working with a consultant appointed by LIC of India to better utilize the parent company’s 1.5 million agents for cross-selling home loans, aiming to overcome internal branch-manager resistance.
- Affordable Housing: Making a cautious foray into the affordable segment to drive double-digit growth, transitioning away from a historical “risk-averse” focus only on salaried individuals.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Q4 Disbursements | ~₹22,000 crores | Seasonally strongest quarter (30-35% of annual business); Retail target ₹20k Cr. |
| Net Interest Margin | 2.70% - 2.72% | Guidance of 2.6%-2.8% maintained for FY26; expects 2-3 bps improvement in Q4. |
| FY26 PAT | ~₹7,200 crores | Represents an estimated 7% annual growth in profitability. |
| Cost of Funds | -5 to -7 bps | Expects minor further reduction in Q4 despite hardening market yields. |
| Loan Book Growth | High single digits | Aiming to improve from current 5% as new 7.15% rate gains traction. |
Risks & Constraints
| Risk | Context |
|---|---|
| Competitive Intensity | Banks are aggressively undercutting HFCs on rates and SOPs, leveraging their direct link to repo rates for faster transmission. |
| Asset Quality (Legacy) | Project loan resolutions remain unpredictable; large builder defaults require legal intervention (NCLT/DRT) which can be stalled by borrowers. |
| Market Yield Volatility | Hardening G-Sec yields following the Union Budget (16% increase in govt borrowing) may pressure borrowing costs and NII. |
| Mindset Shift | Shifting from a 34-year history of conservative salaried-class lending to LAP/Affordable housing requires a significant internal cultural change. |
Q&A Highlights
Growth Trajectory & Market Share
- Question: Why has disbursement growth remained in the single digits for three years while peers grow faster? (Nischint Chawathe, Kotak)
- Answer: Competition from banks is intense in our core salaried segment. We are restructuring our marketing vertical and onboarding consultants to adopt a “double-digit growth” plan by April/May 2026 (Tribhuwan Adhikari).
Balance Transfers (BT-Out)
- Question: What is the trend in balance transfers after lowering rewriting rates? (Kunal Shah, Citigroup)
- Answer: Monthly BT-out was ₹4,014 Cr in Q2 and fell to ₹3,300 Cr in Q3. January saw a further drop to ~₹800-900 Cr. We expect the full benefit of lower rates to show in Q4 (Tribhuwan Adhikari/Lokesh Mundra).
Borrowing Mix
- Question: Why maintain a 50-50 fixed/floating borrowing mix when 99% of loans are floating? (Nishit Shah, ViSolitech)
- Answer: We are constrained by market availability and RBI de-leveraging mandates for banks. We are orients toward floating but must diversify funding sources to ensure liquidity (Tribhuwan Adhikari).
Asset Quality & ARC Route
- Question: Why has the company been slow to use the ARC route for resolutions? (Sonal Minhas, Prescient Cap)
- Answer: We have been conservative but did resolve one ₹500 Cr case in the previous year with a 50% haircut. We are now more focused on resolving legacy project loans through all available channels (Tribhuwan Adhikari).
Key Takeaway
LIC Housing Finance reported a steady Q3 FY26 with a 5% loan book growth to ₹3,14,268 crores and a recovery in NIMs to 2.69%. The quarter was defined by a strategic pivot to protect market share against aggressive bank competition, evidenced by slashing lending rates to a “rock bottom” 7.15% and aggressively promoting loan rewriting to curb balance transfers. While disbursements grew 4% YoY, management acknowledged a “stalemate” in growth and has initiated a major organizational overhaul by onboarding top-tier consultants to revamp marketing, compensation, and the transition toward affordable housing and LAP (currently 15% of the book). Asset quality improved slightly with GNPA at 2.45%, though legacy project loans remain the primary recovery challenge. Looking ahead, management targets a strong Q4 with disbursements of ~₹22,000 crores and maintained NIMs, betting on structural reforms and LIC parent synergies to shift the company from “Hindu rate of growth” to double-digit expansion in FY27.
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