Written by EduInvesting Team | August 01, 2025
At a Glance
LIC Housing Finance Ltd (LICHFL), the largest housing finance company in India, continues to do what it’s always done – lend money for homes while investors debate whether the stock itself deserves a home in their portfolio. At ₹570, the stock trades below book value (0.86x) and at a P/E of 5.7, numbers that scream cheap. But cheap can either mean undervalued or a value trap with a “handle with care” label. Q1 FY26 profit rose 5% YoY to ₹1,360 Cr, but disbursements and growth remain modest. The market isn’t buying the story yet, literally.
Introduction
LICHFL is that old warhorse in the housing finance space – reliable, boring, and often ignored in favor of new-gen HFCs like Aavas, Aptus, or Home First that promise faster growth (and higher valuations). While its peers enjoy P/E multiples north of 20, LICHFL sits quietly at 5.7x, almost as if investors forgot it exists.
The reason? Low growth, low NIMs, and an interest coverage ratio that could use some steroids. But wait – with an ROE of 16% and a portfolio size of ₹2.87 lakh crore, this is no small player. The question is: will LICHFL wake up to its true value, or keep dozing while competitors eat its market share?
Business Model (WTF Do They Even Do?)
LICHFL finances everything housing-related – home loans, loans against property, project financing, and even LRD for commercial properties. Unlike NBFCs chasing risky borrowers, LICHFL plays it safe with salaried and prime borrowers. Its backing by LIC gives it a funding advantage, but also keeps it conservative to a fault.
The company’s business is heavily dependent on interest spreads (NIMs) and the housing demand cycle. The current environment of moderate home demand and high competition means growth is slow, but stable.
Financials Overview
Q1 FY26:
- Revenue: ₹7,250 Cr (+7% YoY)
- Net Profit: ₹1,360 Cr (+5% YoY)
- EPS: ₹24.8
FY25:
- Revenue: ₹28,563 Cr (+2% YoY)
- PAT: ₹5,500 Cr (+16% YoY)
- ROE: 16%
- NIM: 2.4%
Commentary: Solid profits, good ROE, but loan growth is sluggish at 7%. This is like an old diesel car – still running fine, but nobody’s excited to buy it.
Valuation
- P/E Method
- EPS (FY25) ₹100 → P/E 5.7x.
- Peers trade at 10x–30x, so LICHFL looks undervalued.
- P/BV Method
- BV ₹661 → Current P/BV 0.86x.
- Historically trades around 1.1–1.3x, so room for re-rating.
- DCF
- With 8% growth, fair value lands around ₹700–₹800.
Fair Value Range: ₹700 – ₹800 (Current price ₹570 offers 20–30% upside if sentiment turns).
What’s Cooking – News, Triggers, Drama
- Q1 FY26 profit up 5% – steady but uninspiring.
- Loan book growth 7% – lower than peers like Aavas/Aptus (16–30%).
- Wilful Defaulter Committee formed – proactive step for asset quality.
- Dividend: Final dividend declared, record date Aug 22.
- Registered office shift – moving to Maker Tower-F, Mumbai (symbolic, not strategic).
Balance Sheet
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Assets | 2,78,559 | 2,91,334 | 3,14,040 |
| Borrowings | 2,44,913 | 2,52,618 | 2,70,726 |
| Net Worth | 27,185 | 31,477 | 36,352 |
| GNPA | <2% | <2% | ~1.5% |
Remark: Stable asset quality, rising book value, and controlled borrowings – boring but strong.
Cash Flow – Sab Number Game Hai
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Ops | -19,632 | -7,151 | -16,609 |
| Investing | -800 | 587 | -939 |
| Financing | 20,249 | 7,346 | 17,413 |
Remark: Negative operating cash flows are the norm for lenders (loans disbursed are cash outflow). No panic here.
Ratios – Sexy or Stressy?
| Metric | Value |
|---|---|
| ROE | 16% |
| ROCE | 8.93% |
| P/E | 5.7 |
| PAT Margin | 19% |
| D/E | 7.4 |
Remark: High leverage (expected for an HFC), low P/E – value investors drooling, momentum traders snoring.
P&L Breakdown – Show Me the Money
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 22,717 | 27,277 | 28,563 |
| Financing Profit | 3,618 | 6,133 | 7,045 |
| PAT | 2,891 | 4,760 | 5,500 |
Remark: Profit doubling in 2 years while price fell 25% – market clearly on a coffee break.
Peer Comparison
| Company | Rev (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| Bajaj Housing | 9,983 | 2,264 | 42 |
| Aadhar HFC | 3,243 | 949 | 23 |
| PNB Housing | 7,884 | 2,042 | 10 |
| LICHFL | 28,563 | 5,500 | 5.7 |
Remark: LIC Housing is the cheapest in the pack despite being the biggest. Either it’s a hidden gem or the market knows something we don’t.
Miscellaneous – Shareholding, Promoters
- Promoters (LIC): 45.24%
- FIIs: 20.25%
- DIIs: 22.20%
- Public: 12.31%
Promoter holding stable, FIIs holding significant stake, DIIs supportive – ownership is balanced.
EduInvesting Verdict™
LIC Housing Finance is a classic value play – strong balance sheet, high ROE, and cheap valuation. The problem is growth; with only 7% loan book expansion, it lacks the excitement of peers. But with a P/BV below 1 and a P/E of 5.7, the downside looks limited.
SWOT Snapshot
- Strengths: Large scale, strong parentage, cheap valuation.
- Weaknesses: Low growth, thin margins, conservative approach.
- Opportunities: Rising housing demand, rate cuts, re-rating potential.
- Threats: Competition from nimble HFCs, rising NPAs, regulatory tightening.
Conclusion: LICHFL is the undervalued uncle at the family reunion – not flashy, but reliable. For patient investors, this may be a low-risk, moderate-reward bet waiting for its market recognition moment.
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