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Informist, Tuesday, Oct. 14, 2025

By Sagar Sen

NEW DELHI – Buoyed by strong loan disbursement across product segments due to robust festival demand, L&T Finance's bottom line for the September quarter is likely to improve moderately compared with the same quarter last year.

The non-banking finance company is expected to report a consolidated net profit of INR 7.35 billion for Jul-Sept, 5.7% higher than INR 6.96 billion a year ago, according to the average of estimates from eight brokerages. The estimates for net profit range from INR 7.00 billion to INR 7.56 billion. Sequentially, the net profit is seen growing 4.8%.

The lender had reported a consolidated net profit of INR 7.01 billion for the June quarter, up 2.3% on year. Its consolidated revenue rose nearly 13% on year to INR 42.60 billion. The company is scheduled to declare its earnings Wednesday. 

The company's net interest income is also expected to grow at a robust 9.2% on year in the reporting quarter to INR 23.78 billion, up from INR 21.78 billion a year ago. Sequentially, the net interest income is seen growing at a more modest pace of 4.4%.

According to provisional figures released by the lender earlier this month, its retail loan book increased 17% on year to INR 1.05 trillion as of Sept. 30. The non-banking finance company's total retail loan disbursements in the September quarter rose 25% on year to INR 188.50 billion. Within the retail segment, urban finance accounted for the highest share of L&T Finance's disbursements for the quarter under review, at INR 62.85 billion.

Emkay Global Financial Services Ltd. expects the non-banking finance company's margin and fee income to improve sequentially on recovery in the microfinance institution segment and increase in disbursement share of other high-yield products like farm equipment and two-wheeler loans. In the June quarter, an 11% fall in fees and commission income had reduced L&T Finance's revenue by over INR 300 million compared with the year-ago quarter. Brokerages will keep a keen eye on outlook for the microfinance institution business.

Brokerages expect the company's net interest margin to remain stable. "We expect net interest margin + fees to expand 10 basis points quarter-on-quarter to 10.3%, aided by lower borrowing costs," Kotak Institutional Equities said in a report.

Emkay Global expects operating expenses to remain elevated due to investments in tech infrastructure, branch expansion as well as one-time cost of acquisition. "We expect operating expenses to remain elevated with cost-to-income coming at 40.3%. Meanwhile, operating expenses to assets under management is expected at 4.2%," the report said.

Brokerages also expect the lender's asset quality to remain stable. In the June quarter, asset quality of L&T Finance's consolidated portfolio was largely unchanged from the previous quarter. The non-bank financier's gross stage-3 asset ratio was at 3.31% at end of June, up 2 bps on quarter. Net stage-III asset ratio was 0.99%, slightly up from 0.97% on Mar. 31. The provision coverage ratio was 71% at June-end, unchanged from a quarter ago.

Among the 12 research recommendations on the stock available with Informist, 11 have a "buy" rating on L&T Finance while one has a 'sell' rating. The average target price of the 'buy' recommendations is INR 238 while the "sell" call target price is INR 190. The stock ended at INR 262.93 on the National Stock Exchange, down 1.4% from the previous close. The share has gained 25% since Jul. 21. It had announced its June quarter earnings post market hours on Friday, Jul. 18.   

Following are the Jul-Sept earnings estimates for L&T Finance from eight brokerage firms in descending order by the estimate of net profit:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Nishant Maher

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