LIC Housing Finance Ltd (LICHSGFIN) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator (Axis Capital Limited): Ladies and gentlemen, good day, and welcome to the LIC Housing Finance Q2 FY '27 Investor Conference Call, being hosted by Axis Capital Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Praveen Agarwal. Thank you, and over to you, Mr. Agarwal.
Praveen Agarwal (Axis Capital Limited): Thank you, Aviraj. Good day, everyone, and welcome to this earning call of LIC Housing Finance. Today with us from the management team, we have Mr. Sandeep Kumar, MD and CEO, and Mr. Lokesh Mundra, CFO. I would request to Mr. Sandeep to share his initial comments, post which we will open the floor for Q&A. Over to you, sir.
Sandeep Kumar (LIC Housing Finance Ltd): Yeah. Good morning. Good morning, everybody. Yeah. A warm welcome to post-earnings conference call for the LIC Housing Finance Limited. As you are aware, the company has announced its Q2 FY '27 financial results on 30th of October 2026. Before we begin discussing the quarterly performance, let me briefly introduce myself. I joined the company as COO in May 2026 and taken over charge as MD and CEO on 29th of August 2026. Before joining LICHFL, I was associated with LICHFL HFL Financial Services Limited, a subsidiary of LIC Housing Finance, as its MD and CEO. Having been associated with LICHFL group for last two years, I have an opportunity to lead this business operations and its strategic initiatives. Before I start with the highlights of Q2 results, I would like to outline a few economic developments over the last quarter. In October 2026, during the monetary policy review, the RBI increased the repo rate by 25 basis points to 5.5% and shifted its policy stance from neutral to calibrated tightening, reflecting rising inflationary pressure. Persistent geopolitical tension, elevated crude oil prices, upside risks inflation, uncertainty around the globe interest rate trajectory have strengthened market expectations that RBI may maintain a higher monetary policy stance with the interest rates likely to remain elevated for longer. As a result, the company also increased its benchmark lending rate,
Sandeep Kumar (LIC Housing Finance Ltd): 2 2026. Housing demand in the September quarter remained broadly resilient. The underlying demand for the homeownership continues to be supported by urbanization. Looking ahead, the festive season and the sustained domestic economic activity around should further support housing credit demand. With that in an overview, I would like to share the key financial highlights of the quarter. The total revenue from the operations were ₹7,175 crore against ₹7,074 crore for the corresponding quarter of the previous year. Outstanding loan portfolio stood at around ₹332,000, ₹3,26,173 as on 30th September 2026 as against ₹3,11,816 crore as on 30th September 2025 reflecting a growth of 5%. Now out of which retail portfolio stood at around ₹3,16,433 crore as against ₹3,03,084 crore up by 4%, whereas the project loan portfolio stood at ₹9,740 crore against ₹8,732 crore up by around 12%. Total disbursement for the quarter were ₹18,127 crore against ₹16,313 crore for the corresponding period in Q2 FY '06, FY '26, by up by 11 11%. Out of that, disbursement in the retail portfolio were ₹17,563 crore as against ₹15,935 crore, up by 10% year-to-year. Sequentially, quarter-to-quarter, the total disbursement were up by 21% as against the Q1 disbursement of ₹15,014 crore. Disbursement in project loans were ₹564 crore as against ₹378 crore for the same period during the previous year, up by 49%. The net interest income stood at around ₹2,088 crore as against ₹2,038 crore for the same period in the previous year. Net interest margin for Q2 FY 7 '27 stood at 2.58 as against 2.62 for Q2 FY '26 and 2.58 for Q1 FY '27. Profit before tax for the quarter was at 1,918.55 crore as against 1,704.71 crore in Q2 FY '26 at a growth of about 13%. Profit after tax for the quarter stood at 1,508.78 crore as against 1,353.87 crore for the same period, showing a growth of around 11%. In terms of asset quality, Stage 3 exposure at default as on 30th September 2026 stood at 2.05 as against 2.51 as on September 30th, 2025. The total provisions stood at ₹4,292 crore reflecting a provisioning coverage ratio of 49% on Stage 3 as on 30th September 2026. Around ₹553 crore of recovery has been done in this quarter. Apart from this, there were recovery from written-off accounts to the tune of ₹84 crores. On the borrowing side, our cumulative cost of funds stood at 7.29 as on 30th September 2026 compared to 7.42 as on 30th September '25 and 7.28 as on 31st of March 2026, reflecting an improvement of 13 basis points on a year-to-year basis, whereas the incremental cost of funds for Q2 FY '27 stood at 6.91 as against 7.06 in Q1 FY '27. Despite the elevated interest rate environment during the quarter, we have been able to maintain stability in our overall cost of funds while and moderated our incremental borrowing cost sequentially. With this brief introduction, I would like to invite your questions. Thank you.
Moderator (Axis Capital Limited): Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Avinash Singh from Emkay Global. Please go ahead. Mr. Singh, your line line has been unmuted. Please go ahead with your question.
Avinash Singh (Emkay Global): Yeah, hi, good morning. Thanks for the opportunity. First question is on growth. I mean, the growth continues to lag the industry growth. Now, the competitive dynamics of this housing finance is going to stay the way it is. In your core segment of retail salaried customer, the public sector banks remains aggressive and if at all you move down, I mean, the affordable segment, also in terms of the player focused player remains competitive. Now, in this context, how do you see your growth panning out over the coming quarters? And if this aggressive competitive pricing continues, will you be willing to again take a hit on margins to accelerate growth? I mean, to put it very simple, I mean, do you see double-digit growth coming back over coming quarters or not? That's one. Second on this credit cost, I mean, yes it continues to remain negative. The PCR's having come off slightly. But the credit cost, how do you see the outlook for credit cost? I mean, and once you have the kind of recover from past bad book going away, what kind of steady-state credit cost do you see? Thanks.
Sandeep Kumar (LIC Housing Finance Ltd): Yeah, you're absolutely correct, you know, there is a lot of hostility around the corner. World over the interest rates are moving up and I think that is the case in India itself. All companies, all you know, mortgage company, housing loan, finance company including banks, they are facing headwind. You know, I am very certain that we have achieved growth so far for the last two quarters. We have logged in a growth of more than 11% which includes growth from the retail as well as project. And I am, we have given a guidance for the year for a double-digit growth around 12 to 14. What I see that as the rates has been increased across the industry, so there is no competitive margin pressure on us for that matter. But yes, what steps we have taken internally to increase the sales at our end is that we have are increasing a number of people on the feet in our company. We have around more than 8,000 DSAs, agents, those who are giving us business, those who are active. We are also strengthening our marketing subsidy also to get more business in terms of sales, and that is happening that the figures are with us. They are also increasing say around by 25% to 30% on quarterly basis. Secondly, on the margin front, if I see, we have I think two months back if I see in certain products, we have initiated increase in rates with two months back, and in fact that has not impacted us. That has in fact has given us some margin boost if you have seen our results. So I am very confident. And then another thing is we are focusing on product mix, a better product mix whereas we are dominated 100% by the salaried class. Our now focus is moving towards self-employed category to get more more margins. At the same time, we are focusing on project side also. We are also focusing on LAP business also. I think for the current year, we have set our target for achievement of 20% of sales through LAP. This is margin accretive business to us, and we are moving in the same direction. I am confident the projections given by us for the current year, we will hold them, we will may be surpassing them. As far as the credit cost first question is concerned, yes. We are able to show I think a minus 3 bps point in the credit cost for the quarter despite our aggressive recovery. I think we have done more than 500, 560 crore of recovery. And I tell you, none of the case after this 560 is a big one. We have all relied on the retail loan recovery. And I'm I'm very confident that whatever guidance that we have given that is around 7 to 10 basic points of from the present, that will, we will be able to maintain it, we will be able to achieve it by the year end.
Lokesh Mundra (LIC Housing Finance Ltd): Yeah, Avinash this is Lokesh Mundra, CFO. So, what MD has narrated, I want to add some more facts for this quarter only. So, you know, last quarter, my growth was 14.5% disbursement growth, but if you compare the sequential growth for this quarter, it is more than 20%. It is around 21%. So
Lokesh Mundra (LIC Housing Finance Ltd): Company is doing, good on the disbursement, part. But, AUM growth, it's definitely, it's muted, because of the size of our portfolio is more than 3.26 lakh crore. So, definitely, same, similar growth cannot be reflected in AUM. But, definitely, it will take and company is on the right path. And second is, credit cost. Definitely, the last quarter also we have done good job, recovery path. Again, for this quarter Q2, my, my, my credit cost is negative, that is by three bps only, negative and, we are looking, better recov- recovery during, next quarter, Q3 and Q4. As far as, investors are concerned, definitely, to compare, my financials, my, my profitability, most important parameter is return on equity. My return on equity is 14%. I think that is, one of the best in the industry. Yeah, Avinash.
Avinash Singh (Emkay Global): Yeah, thank you, sir. No, so, yes, you rightly alluded, the divergence between, disbursement growth and AUM. So, one element there is, prepayments. It is stable around 12%. But this 11, 12% closer to 12% level, is reasonably higher than what you used to have earlier, more closer to a 10%, 9, 9-10%. Now, till the time this prepayment rates come down, or the divergence between, this disbursement and AUM might continue. So, in that context, what are the steps you're taking, and how do you see this prepayment to come down, particularly if the aggression from, you know, the large public sector bank continues? So, what will kind of, what are the steps you are taking, and how do you hope your, disbursement growth and AUM growth to converge, versus the divergence that you have currently?
Lokesh Mundra (LIC Housing Finance Ltd): So, Avinash, prepayment is prepayment by way of, basically by three things. That is one is our EMI, whatever principal repayment we are getting, every month, through EMI. And the second is my BT-out or you can say the lump sum payment or prepayment. So, it's a, 37 years old company. So, definitely, my prepayment or EMI is, in, in terms of principal it is definitely around, 2, 2.5 2.5, thousand every month. But, as far as BT-out is concerned, as our rates are very competitive, if you compare with even rates, offered by bank. So, my rate is, up to last month it was 7.15% onwards. So, rates were very competitive. I, so, I think, on BT-out front, it is nothing abnormal. So, almost every month, net BT-out is hardly 500 crores only. So, secondly, secondly, for retention of customers, we have formed, at, one, retention vertical at corporate level only, the retention cell. And, whenever we receive, request from the customer for return of documents, request for documents, so definitely, we try to convince the customer that, our rates are very competitive, and wherever required we reprice. We, reprice the loan. So, we are hopeful that, if the company is growing at, double-digit growth, last, last quarter it was 14.5%, this quarter it is around 11%, sequence it is growing at 41% Q-on-Q, Q-on-Q, so, definitely, it will reflect, better growth in my AUM by end of the year.
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