This NBFC stock is in focus after Motilal Oswal published a research report with a 22 percent Upside from the current levels, citing a bullish view with new business expansion and strong growth outlook.
Share Price Movement
With a market capitalization of Rs. 35,020 Crore, the stock of L&T Finance Limited opened at Rs. 137.75, down 0.82 percent from yesterday’s close, and after opening it made a high of 140.90 up 1.43 percent.
Target and Investment Rationale
Motilal Oswal gave a target of Rs. 170 from current levels of Rs. 140, which translates to an upside of 21.42 percent. Company has exhibited better asset quality performance in the current Microfinance Institution (MFI) credit cycle, when others are going through a tough period. Company can also emerge less impacted from events like Karnataka’s new loan recover rules and MFIN guardrails 2.0
Company had made an announcement of entering the gold loan business with the proposed acquisition of Paul Marchants Finance. This will enhance the company’s secured retail portfolio, extending their footprint across 11 states, 130 branches, and customer franchise exceeding 98,000. Motilal expects the new gold loan business to start contributing by end-FY26.
On the technology front, they have started to use AI and Machine Learning for several projects, like predictive risk analysis of defaults, and using technology, they have now started scaling up their Personal loans business, which they earlier had slowed down.
Broker estimates a loan CAGR of approx 21 percent and Profit after Tax (PAT) CAGR of approx 22 percent over FY24-FY27. For FY27, the Return on Assets (ROA) is estimated to be 2.7 percent and the Return on Equity to be approx 14 percent.
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Financial Highlights
The company reported a 15.95 percent YoY increase in revenue from Rs. 3,534 Crore in Q3FY24 to Rs. 4,098 Crore in Q3FY25. On a QoQ basis, the company reported an increase of 1.96 percent in revenue from Rs. 4,019 Crore in the previous quarter.
Their Net profit saw a decrease of 2.03 percent YoY from Rs. 639 Crore to Rs. 626 Crore for the same period. On a QoQ basis, the company reported a decrease of 10.18 percent in Net profit from Rs. 697 Crore in the previous quarter.
About the Company
L&T Finance Limited is a leading non-banking financial company (NBFC) in India, offering a range of financial products and services across retail, rural, and housing finance segments. A subsidiary of L&T Finance Holdings, it focuses on areas such as two-wheeler and farm equipment loans, home loans, SME financing, and microloans.
Written By Abhishek Das
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