LIC Housing Finance shares fell over 2% on Friday, May 16, despite reporting a robust 25.4% year-on-year jump in net profit for the March quarter of FY25. The stock slipped to ₹611.30 on the NSE, down 2.18% from the previous close of ₹624.95. The decline in shares came even as the company posted solid earnings, as investors focused on the contraction in net interest income and cautious disbursement trends in certain segments.
Strong profit growth, but NII under pressure
The mortgage lender, a subsidiary of insurance giant LIC, reported a consolidated net profit of ₹1,368 crore in Q4 FY25, up from ₹1,090.8 crore in Q4 FY24, marking a 25.4% YoY increase. The growth was driven by improved asset quality and lower credit costs.
However, net interest income (NII) dipped 3.2% year-on-year to ₹2,166.5 crore, from ₹2,237.6 crore a year ago, signaling margin pressures amidst intense competition in the housing finance space.
Disbursements see steady growth, but project loans slump
Total disbursements in Q4 FY25 rose 5% YoY to ₹19,156 crore, compared to ₹18,232 crore last year.
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Individual Home Loan disbursements climbed 8% to ₹15,383 crore.
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Project loan disbursements fell sharply to ₹875 crore from ₹1,501 crore YoY.
The company’s total loan portfolio grew 7% to ₹3,07,732 crore, with the Individual Home Loan book up 7% and Project Loan portfolio expanding 15%.
Asset quality improves; provisions decline
LIC Housing Finance’s asset quality improved, with Stage 3 Exposure at Default ratio reducing to 2.47%, from 3.31% a year ago and 2.75% in the December quarter.
Provisions for Expected Credit Loss (ECL) also declined to ₹4,899 crore from ₹6,270 crore, reflecting improving collection efficiencies.
Key financial highlights Q4 FY25:
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Net profit: ₹1,368 crore, up 25.4% YoY
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NII: ₹2,166.5 crore, down 3.2% YoY
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PBT: ₹1,769.58 crore, up 20% YoY
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Total disbursements: ₹19,156 crore, up 5% YoY
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Stage 3 ratio: 2.47% vs 3.31% YoY
Outlook remains cautious
While LIC Housing Finance’s profit and loan book growth remain healthy, investors appear cautious over NII compression and sluggish disbursement trends in project loans, impacting the stock price despite strong quarterly earnings.
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