LICHSGFIN - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 3.7

📊 Core Financials

• Quarterly PAT stable at ₹1,354 Cr. vs ₹1,360 Cr. (+1.88% variation).
• ROE at 16.0% is strong, while ROCE at 8.93% is modest.
• Debt-to-equity ratio at 7.10 is high, typical for housing finance companies but adds leverage risk.
• EPS at ₹100 indicates strong earnings power.

💹 Valuation Indicators

• P/E Ratio: 5.37 (well below industry PE of 18.0, suggesting undervaluation).
• P/B Ratio: ~0.76 (CMP ₹533 / Book Value ₹699, trading below book value).
• PEG Ratio: 0.16 (very attractive, highlighting undervaluation relative to growth).
• Intrinsic Value: CMP appears undervalued, offering margin of safety.

🏢 Business Model & Competitive Advantage

• LIC Housing Finance provides housing loans, leveraging strong brand trust of LIC.
• Competitive advantage lies in wide distribution network, brand legacy, and strong retail presence.
• Focus on affordable housing and retail lending supports long-term demand.

📈 Entry Zone & Long-Term Guidance

• Entry Zone: Attractive near ₹500–₹520 (close to 52-week low ₹484).
• Long-Term Holding: Suitable for investors seeking undervalued housing finance exposure, though leverage risk must be considered.

✅ Positive

• Strong ROE at 16.0% indicates efficient capital usage.
• P/E at 5.37 and P/B at 0.76 show undervaluation.
• EPS of ₹100 highlights strong earnings power.

⚠️ Limitation

• High debt-to-equity ratio (7.10) adds financial risk.
• ROCE at 8.93% is modest compared to peers.
• Dividend yield at 1.89% is moderate, limiting income appeal.

📉 Company Negative News

• FII holdings reduced (-0.08%) and DII holdings reduced (-0.06%), showing cautious sentiment.
• Stock trading below DMA 50 & DMA 200, reflecting weak technical momentum.

📈 Company Positive News

• Quarterly PAT stable at ₹1,354 Cr., showing resilience.
• Strong brand presence and trust under LIC umbrella.

🏭 Industry

• Housing finance industry benefits from rising demand for affordable housing and government incentives.
• Industry PE at 18.0, showing LIC Housing Finance trades at a significant discount to peers.

🔎 Conclusion

LIC Housing Finance demonstrates strong earnings power and undervaluation compared to industry peers, with low P/E and P/B ratios. However, high leverage and modest ROCE limit near-term upside. Entry is advisable near ₹500–₹520 for better risk-reward. Long-term investors may benefit from housing finance growth, though cautious accumulation is recommended due to leverage risks and weak technical momentum.