Citi has retained its ‘Buy’ rating on LIC Housing Finance with a target price of ₹851/share, despite challenges in near-term disbursement growth. The brokerage highlighted that disbursements in Hyderabad and Bangalore—key markets contributing over one-fourth of LIC Housing’s total disbursements—have seen a temporary slowdown. This is expected to impact Q3 FY25 results, which otherwise tend to be seasonally robust.
Citi, however, expects a course correction in Q4 as the company resolves regional bottlenecks and maintains its growth trajectory. On the liquidity front, the brokerage noted tight borrowing costs, which will weigh on margins. As a result, NIMs are likely to sustain at the lower end of guidance, around 2.7%. On a positive note, Citi sees the recent resolution through an ARC sale worth ₹250 crore as a welcome move to release provisions and provide liquidity support. Despite the challenges, Citi remains optimistic about LIC Housing’s medium-term growth prospects, backed by favorable demand drivers and improving operational efficiencies.
