LIC Housing Finance is eyeing low double-digit growth in its assets under management (AUM) this financial year.
The company achieved a sequential growth of 27% in the July-September 2024 quarter. MD & CEO Tribhuwan Adhikari expects healthy growth in the traditionally strong third and fourth quarters of the year.
LIC Housing’s net profit in the second quarter rose 12% year-on-year (YoY) to ₹1,329 crore, driven by stable loan disbursements.
The current market capitalisation of the company is ₹33,746.37 crore.
This is the verbatim transcript of the interview.
Q: Let’s start by getting your sense of growth going ahead. Your disbursements have been strong in the second quarter. The AUM growth is about 6% year on year (YoY). How are you likely to end the year? What is the full-year AUM growth that you are envisaging right now?
A: The full-year AUM growth, because we have a huge base, we are aiming for a double-digit growth, and we stick by that. So growth by the end of the year should be in double digits. Of course, low double digits, not high double digits. As far as the business environment goes, we have done well – 27% growth sequentially from quarter one to quarter two. And quarter three and quarter four, traditionally are good business months for all of us, as well as the industry. So going forward, we expect a good growth in business.
Q: Your disbursement is growing very strongly, but AUM is not growing as much. Why would there be so much of a discrepancy? I know, disbursals are on a smaller base and AUM is a large base, but it’s at half the rate. Is there something we should take away from this?
A: No, nothing major, of course, a bit of the downfall in the portfolio is due to the normal course of business. EMI is getting paid. Yes, there are some prepayments part and full prepayments also there. And yes, it’s a competitive market that’s why, probably the high business growth is not being reflected in the high AUM growth.
Q: NIMs are under pressure, on YoY terms big pressure, but even quarter on quarter (QoQ), there is pressure. Will it mount? Do you think you go below 2.7?
A: No, I don’t think we will go below 2.7. Beginning of the year, we had guided for 2.7 to 2.9. 2.73 is where we are right now. Going forward in Q3 and Q4 you can expect improvement in the NIMs.
Also Read | Affordable housing finance offers better returns but limited growth: Macquarie Capital
Q: When you gave that guidance, low double-digit growth for the book for this year, are you factoring in any contribution from Pradhan Mantri Awas Yojana (PMAY)? Just trying to understand, to what extent are you involved with that scheme, and how do you find the latest version of it.
A: We are involved in the scheme. Being the biggest HFC, we expect to be largely into the scheme, and in the past, we have done pretty well – PMAY. In the earlier versions, we have almost disbursed ₹6,000 crore. So when the scheme gets launched and gets up and running, I believe we will get a good share of that. Yes, that double-digit growth was not completely factored into the PMAY. But yes, some amount of affordable was surely factored in, because we do affordable otherwise also.
Q: Then if we put it all together, would 15% growth be a realistic assumption for this year?
A: I would say 12 to 15%.
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