LIC Housing Finance Ltd Upgraded to Hold by MarketsMOJO on Technical Improvements

Quality Assessment: Steady but Unremarkable Financials

LIC Housing Finance Ltd’s recent quarterly results for Q3 FY25-26 have been largely flat, signalling a pause in growth momentum. The company reported a return on equity (ROE) of 14.3%, which remains respectable within the housing finance industry, indicating efficient utilisation of shareholder funds. However, the net sales growth rate of 7.85% annually and operating profit growth of 7.58% suggest only moderate expansion, falling short of the robust growth rates seen in some peers.

Profitability has shown a modest improvement with a 6.5% rise in profits over the past year, yet this has not translated into significant share price appreciation, as the stock posted a negative return of -0.79% over the same period. The price-to-earnings-to-growth (PEG) ratio stands at 0.8, signalling that the stock is reasonably valued relative to its earnings growth potential. Institutional investors hold a substantial 42.17% stake, reflecting confidence from sophisticated market participants who typically conduct thorough fundamental analysis.

Valuation: Attractive Price-to-Book and Peer Comparison

One of the key drivers behind the upgrade is LIC Housing Finance’s valuation metrics. The stock trades at a price-to-book (P/B) ratio of 0.8, which is attractive compared to the historical averages of its sector peers. This valuation suggests that the market is pricing the stock conservatively, potentially offering a margin of safety for investors.

Despite the stock’s underperformance relative to the broader market indices—delivering a 1-year return of -0.79% against the Sensex’s 10.44% gain—the valuation appeal remains a compelling factor. Over longer horizons, the stock has generated a 3-year return of 52.0%, outperforming the Sensex’s 38.28% in the same period, although the 5-year and 10-year returns lag behind the benchmark significantly.

Financial Trend: Flat Quarter Amid Modest Profit Growth

The company’s financial trend remains subdued with flat quarterly results in December 2025, reflecting challenges in accelerating growth. While profits have increased by 6.5% year-on-year, net sales and operating profits have grown at a modest pace of under 8% annually. This tepid growth trajectory has contributed to the stock’s underperformance relative to the BSE500 index over the last three years and one year.

Despite these challenges, the company’s return on equity and PEG ratio indicate a stable financial footing, which supports the Hold rating. Investors should note that the company’s long-term growth prospects remain below par, and the stock’s recent returns have not kept pace with broader market indices.

Technical Analysis: Shift from Bearish to Mildly Bearish Trend

The most significant catalyst for the rating upgrade is the improvement in technical indicators. The technical grade has shifted from bearish to mildly bearish, signalling a potential stabilisation in price momentum. Key technical metrics present a mixed but cautiously optimistic picture:

• MACD: Weekly readings are mildly bullish, while monthly remain mildly bearish, indicating short-term positive momentum tempered by longer-term caution.
• RSI: Both weekly and monthly RSI readings show no clear signal, suggesting the stock is neither overbought nor oversold.
• Bollinger Bands: Weekly and monthly indicators remain mildly bearish, reflecting some volatility and downward pressure.
• Moving Averages: Daily averages are mildly bearish, consistent with a cautious outlook.
• KST (Know Sure Thing): Both weekly and monthly KST indicators are bearish, signalling some underlying weakness.
• Dow Theory: Weekly readings are mildly bullish, while monthly remain mildly bearish, echoing the MACD’s mixed signals.
• On-Balance Volume (OBV): Weekly OBV is mildly bullish, suggesting accumulation by investors, but monthly OBV remains mildly bearish.

The stock price closed at ₹532.85 on 25 February 2026, up 1.59% from the previous close of ₹524.50. The 52-week trading range is ₹483.50 to ₹646.60, indicating the stock is trading closer to its lower band, which may offer some support.

Comparative Performance: Mixed Returns Against Sensex

LIC Housing Finance’s returns relative to the Sensex provide further context for the rating change. The stock outperformed the Sensex over the short term, with a 1-week return of 2.73% versus the Sensex’s -1.47%, and a 1-month return of 5.16% compared to the Sensex’s 0.84%. However, over the year-to-date period, the stock declined by 1.25%, while the Sensex fell by 3.51%, showing relative resilience.

Longer-term returns tell a more nuanced story. The stock’s 3-year return of 52.0% surpasses the Sensex’s 38.28%, but the 5-year and 10-year returns lag significantly behind the benchmark, with 20.20% versus 61.92% and 33.48% versus 256.13%, respectively. This mixed performance underscores the importance of monitoring both short-term technical signals and long-term fundamental trends.

Conclusion: Hold Rating Reflects Balanced View Amid Mixed Signals

The upgrade of LIC Housing Finance Ltd’s investment rating from Sell to Hold is a reflection of cautious optimism. While the company’s financial performance remains flat and long-term growth is subdued, the stock’s attractive valuation and improving technical indicators provide a foundation for stability. Institutional confidence, as evidenced by a 42.17% holding, further supports this stance.

Investors should weigh the modest profit growth and valuation appeal against the mixed technical signals and underwhelming long-term returns. The Hold rating suggests that LIC Housing Finance Ltd may be suitable for investors seeking exposure to the housing finance sector with a moderate risk appetite, but it does not yet warrant a Buy recommendation given the current market dynamics.

Continued monitoring of quarterly results, technical trends, and sector developments will be essential to reassess the stock’s outlook in the coming months.

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