Earnings Review
Impairment of financial instruments dents L&T Finance's Oct-Dec profit
This story was originally published at 21:15 IST on 20 January 2025
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--L&T Finance Oct-Dec consol net profit INR 6.26 bln
--Analysts saw L&T Finance Oct-Dec consol net profit INR 6.22 bln
--L&T Finance Oct-Dec consol net profit INR 6.26 bln vs INR 6.40 bln yr ago
--L&T Finance Oct-Dec consol revenue INR 40.98 bln vs INR 35.34 bln yr ago
--L&T Finance gross stage-3 asset ratio 3.23?c31 vs 3.19% as on Sept 30
--L&T Finance Apr-Dec consol PAT INR 20.07 bln vs INR 17.66 bln year ago
--L&T Finance net stage-3 asset ratio at 0.97?c31 vs 0.96% as on Sept 30
--L&T Finance Apr-Dec consol revenue INR 119.01 bln vs INR 99.09 bln yr ago
--L&T Finance liquidity coverage ratio at 176% as on Dec 31
--L&T Finance: Consol book at INR 951.20 bln as on Dec 31, up 16% YoY
--L&T Finance: Oct-Dec NIM 8.50% vs 8.94% quarter ago, 8.97% year ago
--L&T Finance: Oct-Dec credit cost at 2.49% vs 2.59% qtr ago, 2.52% yr ago
--L&T Finance: Retail book INR 922.24 bln on Dec 31 vs INR 747.59 bln yr ago
--L&T Finance provision coverage ratio 71% as on Dec 31
--L&T Finance: Oct-Dec retail disbursements at INR 152.10 bln, up 5% YoY
--L&T Finance: Rural business book at INR 262.31 bln Dec 31, up 14% YoY
--L&T Finance: Farmer finance book at INR 150.75 bln Dec 31, up 9% YoY
--L&T Finance: Two-wheeler book at INR 126.76 bln Dec 31, up 21% YoY
--L&T Finance: SME Finance book at INR 58.17 bln Dec 31, up 89% YoY
By Kabir Sharma
MUMBAI – A sharp rise in impairment of financial instruments and a slowdown in rural disbursements led to a 2% on-year fall in L&T Finance's net profit for the quarter ended December. The non-bank finance company reported a net profit of INR 6.26 billion for Oct-Dec, which was down 10% from the previous quarter.
Impairment of financial instruments rose 116.5% on year to INR 7.29 billion in Oct-Dec. Disbursements in rural business finance fell 16% on year and 15% on quarter to INR 45.99 billion in Oct-Dec, weighing on the bottom line.
However, the quarterly profit was slightly higher than analysts' expectations of INR 6.22 billion due to better-than-expected credit costs. Credit cost of the company moderated to 2.49% as the financier utilised macro-prudential provision of INR 1 billion in rural business finance.
The company's consolidated net revenue demonstrated significant growth, rising 16% to INR 40.98 billion from INR 35.34 billion in the same quarter of the previous year. Although sequential growth was modest, with a 2% increase in net revenue.
For the first nine months of the financial year 2024-25 (Apr-Mar), L&T Finance reported a consolidated profit of INR 20.07 billion from INR 17.66 billion during the same period in the previous year. Consolidated revenue, on the other hand, experienced substantial growth in Apr-Dec, rising to INR 119.01 billion from INR 99.09 billion last year.
L&T Finance saw slight deterioration in asset quality, with gross Stage-3 assets at 3.23% as of Dec. 31, compared to 3.19% on Sept. 30. Net Stage-3 assets remained relatively stable, standing at 0.97% on Dec. 31, with a marginal change from 0.96% as on Sept. 30.
As of Dec. 31, L&T Finance's retail book grew 23% year-on-year to INR 922.24 billion. The company's strong business model and diversified retail segments led to a 5% year-on-year increase in festive quarter retail disbursements, reaching a record high of INR 152.10 billion.
L&T Finance's rural business finance book size increased 14% year-on-year to INR 262.31 billion, up from INR 231.10 billion. The company's farmer finance book size grew 9% year-on-year to INR 150.75 billion.
In the two-wheeler finance segment, L&T Finance's book size rose 21% year-on-year to INR 126.76 billion. However, disbursements for this segment declined 5% year-on-year to INR 24.14 billion.
The company's SME finance segment saw a significant 89% year-on-year growth in book size, reaching INR 58.17 billion, up from INR 30.78 billion.
The net interest margin of the lender moderated to 8.50% in Oct-Dec from 8.94% in the quarter-ago period and 8.97% a year ago. Other income of the company fell to INR 76 million in Oct-Dec from INR 473 million in the year-ago period.
The company maintained a robust liquidity position, with a liquidity coverage ratio of 176% for the quarter. The provision coverage ratio of L&T Finance was at 71% as on Dec. 31.
Retail book of the lender was at INR 922.24 bln on Dec. 31, with Oct-Dec retail disbursements at INR 152.10 bln, up 5% on year. The company announced the results after market hours and its shares closed 1% higher at INR 144.47 on the National Stock Exchange. End
Edited by Deepshikha Bhardwaj
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