At 02:45 pm, LTFH was quoting 5 per cent higher at Rs 117.60, as compared to 0.5 per cent decline in the S&P BSE Sensex. Average trading volumes on the counter more-than-doubled with a combined 45.15 million equity shares havinng changed hands on the NSE and BSE thus far in the session.
LTFH, a leading Non-Banking Financial Company (NBFC), offers a range of financial products and services through its subsidiary L&T Finance under the L&T Finance brand. L&T Finance is amongst the leading financial institutions offering Farm Equipment Finance, Rural Business Finance, Two-Wheeler Finance, Consumer Loans, Housing Finance as well as SME Loans.
For the financial year 2022-23 (FY23), LTFH’s profit after tax (PAT) was up 52 per cent year-on-year (YoY) at Rs 1,623 crore. FY23 Retail PAT stood at Rs 1,384 crore, up 87 per cent YoY, due to strong net interest margins (NIMs) and fees of 11.54 per cent for the fiscal.
Under the recently unveiled Lakshya 2026 plan, LTFH aspires to sell-down its wholesale business and emerge as a pure-play retail financier. Tech will be at the forefront of the business and drive all major business functions: sourcing, underwriting, servicing, and collections.
By FY26, the retail business is expected to clock over 25 per cent CAGR and deliver RoA of 2.8–3 per cent. Analysts at Nuvama Wealth and Investment is confident that LTFH is likely to achieve or even surpass this target ahead of time.
“LTFH has been focusing on accelerating retailisation and, thus, leveraging fintech capabilities through automation in order to make the customer journey hassle free and quick. All this should aid sustainable retail AUM growth (31 per cent YoY in FY24E and 24 per cent YoY in FY25E) and gradual improvement in efficiency. However, cost to income (CI) ratio could remain elevated at ~40-41 per cent in the initial phase and subsequently witness improvement at ~38-39 per cent level,” said those at ICICI Securities in a company update.
With the retail loan book gaining traction to almost over 90 per cent of outstanding AUM by FY24E, valuation multiple should witness a re-rating. Further, contained GNPA/NNPA guidance of less than 3 per cent/1 per cent, respectively, provides comfort, the brokerage firm said.
It recommended a ‘BUY’ rating on the stock with a 12-month target price of Rs 125 per share.