LIC Housing Finance shares advanced more than a percent on Thursday after CLSA said the company is better placed on liabilities than other housing finance companies. The global brokerage, however, has reduced its target price on the housing finance company’s stock despite giving it a 'buy' call.

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CLSA has cut its target price on the stock from Rs 525 per share to Rs 420 now — an upside of over 29 percent from its Wednesday's closing price of Rs 325.20.

Even as the stock has gained in at least five sessions in a week, it has burned more than 13 percent of investors’ wealth in a month as against the benchmark Sensex which declined 4 percent during the period.

According to the brokerage firm, LIC Housing Finance’s spreads shall improve in the current fiscal year but are likely to contract in the 2023-2024 financial year. A spread is the gap between the interest you pay and the interest you earn.

It also noted that LIC Housing Finance's home loan yields are up 80-90 basis points for the industry in the past three months but multiples are at COVID lows. The company has fewer liabilities than its peer firms, CLSA added.

Earlier in May, the housing finance firm had said it expects demand for home loans to continue to be healthy. The housing financier's MD and CEO, Y Viswanatha Gowd, exuded confidence that demand in the housing segment is expected to always remain strong, especially after the pandemic.

The company expects growth of 15 percent in its retail home loan portfolio and is seeing a good revival, with uncertainty on account of the COVID now gone and economic activity in place, he told CNBC-TV18 on May 19.

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