LICHSGFIN - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.6
| Stock Code | LICHSGFIN | Market Cap | 27,989 Cr. | Current Price | 510 ₹ | High / Low | 647 ₹ |
| Stock P/E | 5.12 | Book Value | 699 ₹ | Dividend Yield | 1.96 % | ROCE | 8.93 % |
| ROE | 16.0 % | Face Value | 2.00 ₹ | DMA 50 | 532 ₹ | DMA 200 | 563 ₹ |
| Chg in FII Hold | 0.19 % | Chg in DII Hold | -0.33 % | PAT Qtr | 1,384 Cr. | PAT Prev Qtr | 1,354 Cr. |
| RSI | 43.1 | MACD | -7.48 | Volume | 24,48,566 | Avg Vol 1Wk | 22,33,899 |
| Low price | 484 ₹ | High price | 647 ₹ | PEG Ratio | 0.15 | Debt to equity | 7.10 |
| 52w Index | 15.9 % | Qtr Profit Var | -3.35 % | EPS | 99.4 ₹ | Industry PE | 16.7 |
📊 Analysis: LIC Housing Finance (LICHSGFIN) trades at a very attractive valuation (P/E 5.12 vs Industry P/E 16.7), making it undervalued compared to peers. ROE at 16% is strong, though ROCE at 8.93% is modest. The PEG ratio of 0.15 suggests growth is priced very attractively. Dividend yield at 1.96% provides decent income support. However, the debt-to-equity ratio of 7.10 highlights high leverage, typical for housing finance companies, but adds risk. Technically, the stock is trading below its 50 DMA (532 ₹) and 200 DMA (563 ₹), reflecting weak momentum. RSI at 43.1 indicates mildly oversold conditions, while MACD (-7.48) signals bearishness. Quarterly PAT declined (-3.35%), raising concerns about near-term earnings stability.
💰 Ideal Entry Price Zone: Between 490 ₹ – 510 ₹ (near support levels and undervaluation zone). Accumulation is advisable for long-term investors seeking value.
📈 Exit Strategy / Holding Period: If already holding, maintain a long-term horizon (3–5 years) given strong ROE and attractive valuations. Consider partial profit booking if price revisits 620–640 ₹ levels. Long-term investors should monitor leverage and earnings growth closely.
✅ Positive
- Very low P/E (5.12 vs Industry 16.7) indicates undervaluation.
- Strong ROE (16%) reflects profitability.
- PEG ratio of 0.15 highlights attractive growth pricing.
- Dividend yield of 1.96% provides income support.
- Quarterly PAT improved sequentially from 1,354 Cr. to 1,384 Cr.
⚠️ Limitation
- High debt-to-equity ratio (7.10) indicates significant leverage risk.
- ROCE at 8.93% is modest compared to peers.
- Stock trading below 50 DMA and 200 DMA shows weak momentum.
- Quarterly profit variation (-3.35%) highlights earnings pressure.
📉 Company Negative News
- DII holdings reduced (-0.33%), showing cautious domestic sentiment.
- MACD (-7.48) indicates bearish trend.
- Stock corrected from 647 ₹ high, showing resistance at upper levels.
📈 Company Positive News
- Sequential PAT growth from 1,354 Cr. to 1,384 Cr.
- FII holdings increased (+0.19%), signaling foreign confidence.
- Strong EPS of 99.4 ₹ provides a solid earnings base.
🏭 Industry
- Housing finance sector benefits from rising demand for affordable housing and government initiatives.
- Industry PE at 16.7, showing LICHSGFIN trades at a deep discount.
- Long-term demand supported by urbanization and real estate growth.
🔎 Conclusion
LICHSGFIN is a value candidate for long-term investment, supported by strong ROE, low P/E, and attractive PEG ratio. However, high leverage and modest ROCE warrant caution. Ideal entry is around 490–510 ₹. Existing investors should hold for 3–5 years, booking profits near 620–640 ₹ levels, while monitoring debt levels and earnings growth sustainability.