L&T Finance Holdings hits 52-week high, surges 6% on strong Q3 results

Shares of L&T Finance Holdings (LTFH) hit a 52-week high of Rs 98.25 as they surged 6 per cent on the BSE in Monday's intra-day trade after the company reported a strong set of earnings for the October-December quarter (Q3FY23). Its net profit rose by 39 per cent year-on-year (YoY) to Rs 454 crore on improvement in margins and fees.

The stock of the investment company of the Larsen & Toubro (L&T) group surpassed its previous high of Rs 96.35, touched on December 15, 2022. In the past three months, it has rallied 28 per cent as compared to 4 per cent rise in the S&P BSE Sensex.

The company’s retail profit after tax jumped 76 per cent YoY at Rs 394 crore, supported by strong Retail Return on Assets (RoA), reaching 2.6 per cent in Q3FY23. Retail portfolio mix now stands at 64 per cent of the total loan book. The company said it recorded highest-ever quarterly retail disbursements - in line with Lakshya 2026; gaining momentum towards becoming a customer-focused, retail finance company.

The Net Interest Margin (NIM) plus fees grew to 8.8 per cent in the December quarter, up 70 basis points over the year-ago period. The NIM plus margins were 8.43 per cent in the September quarter. They improved despite the rise in costs of funds in Q3.

Further, its gross non-performing assets (GNPAs) declined to 4.21 per cent in December 2022 from 6.69 per cent a year ago. The net NPAs also dipped from 3.17 per cent in December 2021 to 1.72 per cent in December 2022.

"After the divestment of the mutual fund business, LTFH has proposed merger of its subsidiary lending entities - L&T Finance and L&T Infra Credit with itself. This will result in a simple and unified structure, leading to optimal use of capital and effective use of management bandwidth. This merger would be subject to necessary statutory/regulatory approvals," the company said in a statement.

Micro finance institution (MFI), Home loans and Consumer businesses witnessed a sequential improvement in disbursements. The company has successfully concluded the sale of its mutual fund business and has started seeing strong growth in its Retail loan book, even as it has accelerated the sell-down of the wholesale segment.

Additional provisions of 1.9 per cent should provide the necessary buffer to protect against contingent slippages in the RE segment. LTFH has proposed a merger of its subsidiary lending entities: L&T Finance and L&T Infra Credit with LTFH. The merger would create a ‘single lending entity’ providing superior operational efficiencies, Motilal Oswal Financial Services said.