LIC Housing Finance Sees Double Digit Growth

LIC Housing Finance is set to grow by double digits in the second half of FY2027, with its portfolio expected to jump to ₹3.5 lakh crore, according to Sandeep Kumar, MD & CEO of the company. The housing financier is expanding beyond home loans into project finance, loan against property (LAP), and affordable housing, while maintaining its core mortgage business.

The company’s outstanding loan portfolio currently stands at ₹3.26 lakh crore, reflecting a 4.6 per cent year-on-year growth. Kumar stated that the company aims to grow the portfolio by at least 10 per cent over the next two quarters. For the full year, the company is guiding for disbursement growth of 12-14 per cent and a double-digit growth in the loan portfolio.

Growth Strategy

Kumar attributed the 11 per cent increase in profit in Q2 to the company’s decision to increase lending rates by up to 15 basis points two months ago, and another rate hike of up to 25 basis points across its existing portfolio and new disbursements. The average age of the company’s borrowers is around 40-45 years, with a typical loan account remaining with the company for seven to eight years.

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The average ticket size is about ₹32-33 lakh. As the company scales up segments such as LAP, it expects these metrics to improve further in the coming quarters. Kumar noted that the company is not meaningfully present in the affordable housing segment at present, but plans to build scale in this business with a dedicated operating structure.

Historically, more than 80 per cent of the company’s portfolio has come from salaried borrowers. However, the company is expanding into the self-employed segment as a conscious strategy, offering better margins. The company is also increasing its focus on the LAP business and lease rental discounting (LRD), and exploring opportunities in project finance, which is a relatively margin-accretive business.

Project Finance

The company’s project finance book currently stands at around ₹10,000 crore, with a target of fresh project finance sanctions of around ₹4,000 crore this year. The segment is already showing encouraging signs, with nearly 50 per cent growth during Q2. Kumar stated that the company sees significant potential in project finance, which offers greater diversification and is a margin-accretive business.

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For the current financial year, the company has set a target of 100 per cent growth in the project finance vertical. The company is also exploring inorganic growth opportunities, with the board approving a pool-buying framework. They expect to begin pool-buying activity on a small scale in the third quarter and gradually scale it up with larger transactions in the fourth quarter.

The company’s target is to increase the share of non-home loan products, particularly LAP, to around 20 per cent of the overall portfolio by the end of the year. The project finance segment is expected to contribute more meaningfully going forward. Kumar noted that the company’s expansion into new segments is expected to improve its metrics, including the average ticket size and average age of borrowers.