Synopsis: Shares of LIC Housing Finance Limited are in focus after approving a Rs 1.27 lakh crore borrowing plan aimed at supporting loan growth. The move enhances liquidity and funding flexibility, though margin pressures from rising costs remain a key risk, even as modest revenue growth and slight profit decline were reported.
The company, which is a leading housing finance NBFC, is currently focusing on growing its lending business with a large borrowing programme. This is because its plan to borrow Rs 1.27 lakh crore reflects its strategy to enhance its liquidity position and support growth in its loan book.
With a market cap of Rs 27,242 crore, the shares of LIC Housing Finance Ltd are trading at Rs 495 and are trading at a PE of 5 compared to their industry’s PE of 12.9. The shares have given a return of more than 14% in the last 5 years.
Borrowing Scale: Signalling Growth Intent
The massive Rs 1.27 lakh crore borrowing plan sanctioned by LIC Housing Finance Limited is an indication of its strong growth intent. The borrowing scale for an NBFC is an important factor in assessing its growth prospects, as it is a key determinant for growth in such companies.
The diversified nature of borrowings such as bonds, debentures, commercial papers, and external borrowings gives room for optimising the cost of capital. The liquidity conditions in the market are very volatile, and such an optimisation is essential in managing interest rates.
Loan Growth and Margin Dynamics in Focus
With a higher borrowing base, LIC Housing Finance is well-positioned to increase its loan disbursements, especially in housing finance, where demand is structurally high. This could be a big positive for AUM growth and market share. What is more important is that this will be possible without a significant increase in the cost of funds.
If the cost of funds goes up on account of higher interest rates, it could be a concern for margins. The plan to borrow Rs 1.27 lakh crore is a well-thought-out move that ensures that the company has adequate liquidity in place, thereby enabling it to maintain its capital base.
Liquidity is a must for NBFCs, given their high leverage. In conclusion, the Rs 1.27 lakh crore borrowing plan by LIC Housing Finance Limited indicates its commitment to expanding its lending activities. Although the move can benefit the company in terms of liquidity as well as expanding its loan book, its effectiveness can only be determined by its ability to contain its borrowing costs.
Financials and more
The revenue from operations for the company stood at Rs 7,209 crore in Q3 FY26 compared to the Q3 FY25 revenue of Rs 7,070 crore, up by about 2 per cent YoY. However, the net profit stood at Rs 1,398 crore in Q3 FY26, down compared to the Rs 1,435 crore profit in Q3 FY25.
LIC Housing Finance Limited is one of India’s leading housing finance NBFCs, primarily providing home loans and loans against property. Backed by LIC, the company has a strong presence across India and focuses on retail housing finance with a diversified loan portfolio.
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