On Monday, Axis Capital (NYSE:AXS) Limited adjusted its outlook on LIC Housing Finance (LICHF:IN), raising the price target to INR800.00 from the previous INR750.00. The firm maintains a Buy rating on the stock. The revision follows the company's first-quarter financial performance for the fiscal year 2025, where the Profit After Tax (PAT) reached Rs 13 billion. This figure represented a slight year-over-year decrease of 2% but showed a 19% increase from the previous quarter, surpassing estimates by approximately 17%.
The report noted that the higher-than-expected PAT was supported by reduced credit costs. Despite this, Net Interest Income (NII) experienced a decline, both year-over-year and quarter-over-quarter, by 10% and 11% respectively, and was about 9% lower than anticipated. This was attributed to reduced Net Interest Margins (NIM) and modest year-over-year growth of 4.4%.
Nevertheless, LIC Housing Finance demonstrated a solid performance in loan disbursements, which grew by approximately 19% year-over-year. The company also saw a rise in non-individual loans.
The NIM, which stood at 2.76%, is expected to stabilize, with projections suggesting it will hover between 2.7% and 2.9%. In terms of asset quality, the company is reported to be largely stable, with ongoing resolutions in its legacy corporate portfolio.
Axis Capital has affirmed its estimates for LIC Housing Finance and increased the price target to INR800, which is based on 1.2 times the fiscal year 2026 estimated Price to Adjusted Book Value (P/ABV).
InvestingPro Insights
Following the recent financial performance of LIC Housing Finance, the market has shown a mixed response. According to InvestingPro data, LIC Housing Finance has experienced significant volatility, with a 1-week total price return of -27.4%, indicating a sharp decline in share value in a short period. The market capitalization currently stands at a modest 0.98M USD, reflecting the size and valuation of the company in the market.
In terms of valuation metrics, the company is trading at a low P/E ratio of -2.98, which suggests that despite recent earnings growth, the market may not fully recognize the company's profit potential. This aligns with an InvestingPro Tip indicating that LIC Housing Finance is trading at a low earnings multiple relative to near-term earnings growth, which could present an opportunity for investors looking for undervalued stocks.
Moreover, the company's stock has fared poorly over the last month, with a 1-month price total return of -5.36%. This could be reflective of broader market trends or company-specific challenges. However, it's worth noting that LIC Housing Finance has maintained dividend payments for 24 consecutive years, highlighting its commitment to shareholder returns even in turbulent times—an aspect underscored by another InvestingPro Tip.
For investors seeking more insights, there are additional InvestingPro Tips available, which can provide further guidance on the company's financial health and market performance. In particular, investors may find it beneficial to explore the company's long-term return profile and analyst predictions regarding profitability.
Overall, these InvestingPro insights can help investors make more informed decisions about their investments in LIC Housing Finance. For a deeper analysis, consider exploring the full range of insights at https://www.investing.com/pro/LICH.
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