Equity L/S Analyst | Forensic Accounting | India, Yellowstone Equity

Ankit Agrawal, CFA

Equity L/S Analyst | Forensic Accounting | India

Creating Wealth through Alpha and Compounding

Yellowstone Equity

Providing unbiased and independent research on Indian equities to global institutions and individual investors


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Regulatory Disclosure: 
Note that Ankit Agrawal (Proprietor of Yellowstone Equity) is a SEBI registered Research Analyst (Registration No.: INH000007216). Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Investment in securities market are subject to market risks. Read all the related documents carefully before investing.

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Compliance/Grievance Officer:
Name: Ankit Agrawal
Email: services@yellowstoneequity.com
Mobile: +91-7575817289
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Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/lic-housing-finance-ltd" target="_blank" data-smartkarma-citation="entities:15667:1" rel="noopener">LIC Housing Finance ("LICHF")</a>  has had a sluggish growth phase over the last two years due to competition from banks. However, growth is now reviving with LICHF taking new initiatives.</li>
<li>LICHF is enhancing its mix towards LRD and LAP loans, while simultaneously venturing into affordable housing from scratch. Disbursements grew 10% YoY in Q4FY26.</li>
<li>Asset quality has been continuously improving and a few big accounts have also seen resolution. In Q4, INR 70cr was recovered from a large account via sale to an ARC.</li>
</ul>



LIC Housing Finance ("LICHF")  has had a sluggish growth phase over the last two years due to competition from banks. However, growth is now reviving with LICHF taking new initiatives.
LICHF is enhancing its mix towards LRD and LAP loans, while simultaneously venturing into affordable housing from scratch. Disbursements grew 10% YoY in Q4FY26.
Asset quality has been continuously improving and a few big accounts have also seen resolution. In Q4, INR 70cr was recovered from a large account via sale to an ARC.


LICHF: Taking New Initiatives to Revive Growth

Derivatives and Quantitative Strategist

Gaudenz Schneider

<ul>
<li>
Context: The <a href="https://www.smartkarma.com/entities/lic-housing-finance-ltd" target="_blank" data-smartkarma-citation="entities:15667:1" rel="noopener">LIC Housing Finance (LICHF IN)</a> vs. <a href="https://www.smartkarma.com/entities/bank-of-india" target="_blank" data-smartkarma-citation="entities:541:1" rel="noopener">Bank Of India (BOI IN)</a> price-ratio deviates more than two standard deviations from its one-year average, presenting a potential relative value opportunity.</li>
<li>
Highlights: Going long <a href="https://www.smartkarma.com/entities/lic-housing-finance-ltd" target="_blank" data-smartkarma-citation="entities:15667:1" rel="noopener">LIC Housing Finance (LICHF IN)</a> and short <a href="https://www.smartkarma.com/entities/bank-of-india" target="_blank" data-smartkarma-citation="entities:541:1" rel="noopener">Bank Of India (BOI IN)</a> targets a 7% return.</li>
<li>
Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.</li>
</ul>



Context: The LIC Housing Finance (LICHF IN) vs. Bank Of India (BOI IN) price-ratio deviates more than two standard deviations from its one-year average, presenting a potential relative value opportunity.

Highlights: Going long LIC Housing Finance (LICHF IN) and short Bank Of India (BOI IN) targets a 7% return.

Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.


Long LIC Housing (LICHF IN) Vs. Short Bank of India (BOI IN): Statistical Arbitrage Pair Trade

<ul>
<li>While <a href="https://www.smartkarma.com/entities/lic-housing-finance-ltd" target="_blank" data-smartkarma-citation="entities:15667:1" rel="noopener">LIC Housing Finance ("LICHF")</a>  has significantly improved its asset quality, its growth continues to remain sluggish due to intense competition from banks.</li>
<li>LICHF has been diversifying away from lending to salaried prime borrowers into affordable home loans. Its impact on growth would be gradual as the mix improves.</li>
<li>However, LICHF is trading at a very cheap valuation of 0.7x P/B, similar to COVID level, thus offering a strong upside potential even if growth takes a while to revive.</li>
</ul>


While LIC Housing Finance ("LICHF")  has significantly improved its asset quality, its growth continues to remain sluggish due to intense competition from banks.
LICHF has been diversifying away from lending to salaried prime borrowers into affordable home loans. Its impact on growth would be gradual as the mix improves.
However, LICHF is trading at a very cheap valuation of 0.7x P/B, similar to COVID level, thus offering a strong upside potential even if growth takes a while to revive.


LICHF: Growth Sluggish, But Valuation Presents Strong Upside As Growth Revives

<ul>
<li>LICHF's asset quality has improved considerably with Stage 3 assets now at 2.51% vs 2.62% QoQ and 3.06% YoY. Recoveries have been also meaningful and are likely to contribute further. </li>
<li>NIM declined to 2.62% vs 2.68% QoQ due to repricing of back book per the 25bp PLR cut. NIM is set to expand as borrowing costs come down.</li>
<li>While growth has been below par due to intense competition from PSU banks; adjusted for balance transfer, it has been decent. Furthermore, H2FY26 tends to be seasonally better.</li>
</ul>


LICHF's asset quality has improved considerably with Stage 3 assets now at 2.51% vs 2.62% QoQ and 3.06% YoY. Recoveries have been also meaningful and are likely to contribute further. 
NIM declined to 2.62% vs 2.68% QoQ due to repricing of back book per the 25bp PLR cut. NIM is set to expand as borrowing costs come down.
While growth has been below par due to intense competition from PSU banks; adjusted for balance transfer, it has been decent. Furthermore, H2FY26 tends to be seasonally better.


LIC Housing Finance (LICHF): Growth Still Elusive But Asset Quality Has Normalized

<ul>
<li>LICHF has been producing below-average growth over the past four years; however FY26 is expected to be a normal year in terms of growth and asset quality.</li>
<li>Q1FY26 saw growth of 7% YoY in AUM, which is decent considering that Q1 tends to have employee promotions and transfers which disrupt the operations somewhat.</li>
<li>Asset quality has stabilized with GNPA at 2.6% vs 3.3% YoY, although it has worsened slightly QoQ due to collection delinquencies in some retail loans. </li>
</ul>


LICHF has been producing below-average growth over the past four years; however FY26 is expected to be a normal year in terms of growth and asset quality.
Q1FY26 saw growth of 7% YoY in AUM, which is decent considering that Q1 tends to have employee promotions and transfers which disrupt the operations somewhat.
Asset quality has stabilized with GNPA at 2.6% vs 3.3% YoY, although it has worsened slightly QoQ due to collection delinquencies in some retail loans. 


LIC Housing Finance (LICHF): Decent Q1FY26 | FY26 Looks Promising

India

LIC Housing Finance Limited provides housing finance services to individuals for purchase, construction, repair and renovation of new or existing flats and houses. The Company also provides finance on existing property for business, personal needs and gives loans to professionals for purchase, construction of clinics, nursing homes, diagnostic centers, and office space throughout India.

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LIC Housing Finance (LICHF IN)

LICHF: Taking New Initiatives to Revive Growth

Due to competition from banks, growth had been sluggish but is now reviving led by LICHF's new initiatives. At current valuation, an investment in...

Ankit Agrawal, CFA

Long LIC Housing (LICHF IN) Vs. Short Bank of India (BOI IN): Statistical Arbitrage Pair Trade

Potential relative value opportunity with a 7% target-return by going long LIC Housing Finance and short Bank of India. Essential for quantitative...

Gaudenz Schneider

LICHF: Growth Sluggish, But Valuation Presents Strong Upside As Growth Revives

LICHF has been facing tepid growth for the last couple of years due to intense competition from banks. However, at 0.7x P/B, it offers strong...

Ankit Agrawal, CFA

LIC Housing Finance (LICHF): Growth Still Elusive But Asset Quality Has Normalized

LICHF's asset quality has normalized. Growth remains sub-par but is on track to improve. The stock has potential to re-rate significantly as it is...

Ankit Agrawal, CFA

LIC Housing Finance (LICHF): Decent Q1FY26 | FY26 Looks Promising

LICHF is on track to post a strong FY26 led by decent growth and stable asset quality. At current valuation, it has potential to more than double.

Ankit Agrawal, CFA

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