Earnings Outlook
L&T Fin PAT seen flat as MFI stress may offset AUM growth
This story was originally published at 20:38 IST on 17 July 2025
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By Vaishali Tyagi
MUMBAI – L&T Finance's bottom line for the quarter ended June is expected to remain flat compared to a year ago, as the gains from growth in assets under management may be offset by weakness in the microfinance portfolio.
The non-banking finance company is expected to report a net profit of INR 6.84 billion for the reporting quarter, marginally lower than INR 6.86 billion a year ago, according to the average of estimates from six brokerages. The estimates for net profit range from INR 6.70 billion to INR 6.96 billion. Sequentially, the net profit is seen growing 7.5%.
The lender reported a consolidated net profit of INR 6.36 billion in the quarter ended March, up 14.9% on year. For the financial year ended March, the consolidated net profit was at INR 26.44 billion, higher than INR 23.20 billion reported a year ago.
The company is scheduled to declare its earnings on Friday.
The company's interest income is also expected to be largely flat on year at INR 20.97 billion compared with
INR 21.01 billion a year ago. Sequentially, the net interest income is seen down 2.5%. On Thursday, the company's shares ended 1.8% lower at INR 199.78 on the National Stock Exchange.
According to provisional figures released by the lender earlier this month, its retail loan book increased 18% on year to INR 998.00 billion as of Jun. 30. The non-banking finance company's total retail loan disbursements in the June quarter rose 18% on year to INR 175.10 billion. Within the retail segment, urban finance accounted for the highest share of L&T Finance's disbursements at INR 68.50 billion in the June quarter.
Emkay Global expects L&T Finance's assets under management to surpass the INR 1.0 trillion mark, growing 4.5% quarter-on-quarter and 15% year-on-year. This growth will be driven by strong disbursements across product segments, except for small and medium enterprise finance. For the quarter ended March, retail disbursements were INR 148.99 billion, down from INR 150.44 billion in the same quarter last year.
Kotak Institutional Equities expects the company's net interest margin and fees to compress 100 basis points on year, reflecting a shift in loan mix.
The lender's consolidated revenue rose 9.6% on year to 40.23 billion in the quarter ended March. On a sequential basis, revenue declined nearly 2%.
Emkay Global expects operating expenses to remain elevated due to investments in tech infrastructure and branch expansion, with a cost-to-income ratio of 41% and an operating expenditure-to-AUM ratio of 4.2%. Both Kotak Institutional Equities and Sharekhan expect the operating expenses to moderate further, with a cost-to-AUM ratio of 3.9%. Emkay expects credit costs to remain at 2.3%, while Kotak and Sharekhan peg credit costs at 2.4%, acknowledging stress in the state of Karnataka.
Emkay expects L&T Finance's asset quality to remain broadly stable, with gross stage-3 and net stage-3 at 3.2% and 1%, respectively. The company's focus on developing its tech infrastructure and expanding its branch presence is expected to drive growth and improve profitability. The gross stage 3 ratio stood at 3.29% as on Mar. 31, up from 3.23% as on Dec. 31, while the net stage 3 asset ratio stood at 0.97% as on Mar. 31, the same as a quarter ago.
Following are the Apr-Jun earnings estimates for L&T Finance based on reports from six brokerage firms in descending order by the estimate of net profit:
| Brokerage |
Net interest income (in INR million) |
Net profit (in INR million) |
| Kotak Institutional Equities |
19,836.00 |
6,963.00 |
|
Anand Rathi Share and Stock Brokers Ltd. |
22,125.00 | 6,959.00 |
| Sharekhan Ltd |
21,880.00 |
6,850.00 |
| Emkay Global Financial Services Ltd |
21,501.00 |
6,803.00 |
|
JM Financial Institutional Securities Pvt. Ltd. |
20,159.00 |
6,743.00 |
| Nuvama Wealth Management Ltd |
20,300.00 |
6,700.00 |
|
Average |
20,966.83 |
6,836.33 |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Saji George Titus
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