LIC-owned NBFC stock under ₹50 jumps over 7%; inks co-lending loan agreement with SBI

LIC HFL-SBI Join Hands for Co-Lending Initiative

LIC Housing Finance, backed by India’s largest life insurer, LIC (Life Insurance Corporation of India), entered into a collaborative co-lending arrangement with SBI, the country’s largest commercial bank.

Under this model, both institutions will jointly disburse home loans to eligible borrowers, with LIC HFL contributing a smaller portion (typically 20%) while SBI contributes the majority share (around 80%) of the loan.

The agreement is expected to bring down the cost of borrowing for low-income and middle-income borrowers, a segment that has been actively targeted under the government’s "Housing for All" initiative.

“The partnership enables us to scale our reach to underserved segments by leveraging SBI’s broad network. This is a strategic move in line with our focus on driving financial inclusion through affordable housing,” said Y. Viswanatha Gowd, MD & CEO of LIC HFL.

Stock Market Reaction: Surge in Volume and Price

The LIC HFL stock, which has been trading under ₹50 for several months, rose 7.35% to ₹48.80 on the NSE, with intraday highs crossing the ₹49 mark.

Trading volumes also witnessed a significant jump, with over 4.2 million shares changing hands, compared to a 30-day average volume of 1.8 million. Market participants see this agreement as a catalyst for better margins and enhanced disbursement volumes in FY26.

“The co-lending model offers NBFCs like LIC HFL the chance to expand books without over-leveraging. Given the low price of the stock, the upside potential looks attractive, particularly if credit growth sustains,” said Ravi Menon, senior equity analyst at Elara Capital.

Why LIC HFL's Stock is Attracting Attention

Even before this announcement, LIC HFL was drawing interest due to its strong parentage, improving asset quality, and focus on affordable housing. The stock has underperformed in the broader NBFC rally, partly due to tight margins and provisioning worries.

However, with macro indicators such as lower inflation, falling bond yields, and robust demand for housing loans, the outlook for housing finance companies has improved.

The co-lending model, which reduces NBFCs’ capital requirement while benefiting from banks’ lower cost of funds, is a win-win formula gaining traction post-RBI’s push to enhance credit access in rural and semi-urban regions.

Analyst Commentary and Sector View

Brokerage firms see the SBI-LIC HFL partnership as structurally positive.

“LIC HFL is sitting on a massive opportunity in Tier 2 and Tier 3 cities. With this co-lending pact, their operating leverage will improve. While short-term volatility may remain, the long-term outlook is constructive,” noted Megha Doshi, financial sector analyst at Nuvama Wealth.

Experts point out that while HDFC’s merger with HDFC Bank created a vacuum in the housing finance NBFC space, players like LIC HFL are now well-positioned to fill that gap, especially in the mid-ticket and affordable segment.

LIC HFL’s gross NPA ratio has also seen improvement, declining to 4.2% in FY25 from 5.1% in FY24, thanks to improved collections and lower slippages.

Investor Outlook: Value Pick or Value Trap?

Despite today's jump, LIC HFL continues to trade at a significant discount to its book value, making it an intriguing value pick for investors who believe in India’s housing finance growth story.

“It’s one of the rare PSU-backed NBFCs where the fundamentals are gradually turning around. The co-lending partnership with SBI enhances credibility and distribution reach. If execution goes well, the rerating can be sharp,” said Amit Goel, CIO, Pacewealth Investment Advisors.

Retail and institutional investors are also awaiting Q1 FY26 earnings to assess the real impact of the co-lending operations, especially on loan book growth, spreads, and cost-to-income ratio.

However, caution is advised due to the stock's historic underperformance and the execution risks involved in operationalizing co-lending seamlessly at scale.

LIC HFL’s co-lending agreement with SBI marks a strategic leap toward expanding its loan portfolio efficiently while keeping risks and costs in check. The 7%+ rally is a vote of confidence from the market, although sustained delivery on business performance will be key to further gains.

As India’s real estate and housing finance sectors continue to benefit from favourable demographics and government policies, LIC HFL may finally be turning a corner—emerging not just as a value pick, but a strategic play on Bharat’s housing dream.