Morgan Stanley has maintained its Underweight rating on LIC Housing Finance with a target price of Rs 435 per share, citing concerns over the company’s structural outlook for FY26 despite a better-than-expected Q4 performance.
According to the brokerage, LIC Housing delivered a 6% beat on net interest income (NII), driven by net interest margin (NIM) expansion. The loan book grew 7% year-on-year, in line with expectations. Additionally, total income surpassed estimates by 10%, aided by higher other income.
While pre-provision operating profit (PPOP) came in stronger than anticipated, the operating costs were also higher. Credit costs were in line with estimates, the note said.
Morgan Stanley acknowledged the stock appears cheap at current levels (last traded at Rs 616.85) and may perform well in the near term. However, it expressed reservations about the sustainability of this performance, flagging a structurally weakening franchise and a weak outlook for NIM and PPOP in FY26.
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