FOREX
L&T Finance shares end positive despite weak Q3
L&T Finance shares dipped 3 per cent to hit an intra-day low of ₹140 on the NSE, a day after the company reported a 2.2 per cent decline in net profit for the quarter ended December 2024 at ₹626.40 crore as against ₹640.18 crore in the corresponding previous quarter.The stock, however, managed to close 1.06 per cent higher on the NSE at ₹146 despite gloom all around.
Total revenue from operations stood at ₹4,097.58 crore in the December 2024 quarter, compared to ₹3,533.96 crore in the same previous quarter. It included interest income of ₹3,806.38 crore (₹3,306.30) in the period under review.
Retail loan disbursements stood at ₹15,2210 crore during Q3FY25, up 5 per cent y-o-y. Retail loans were up 23 per cent at 92,224 crore as of December 2024, constituting 97 per cent of the total loan book.
Sudipta Roy, Managing Director and CEO of LTF said, “Despite certain macro challenges within the microfinance sector, we have managed the situation effectively. We are hopeful that the environment will be much better over the next couple of quarters.”
In addition, the company has appointed Zeenat Hamirani as the Chief Risk Officer as of January 21, 2025, in the place of Amresh Kumar, a stock exchange filing said.
Global brokerage Morgan Stanley has assigned an Underweight call on the stock at a target price of ₹112 per share. Q3 profits were above estimates. The Q3 retail AUM growth moderated to 23 per cent y-o-y.
The company had created macro-prudential provisions of ₹975 crore for rural group loans and microfinance (MFI) businesses during Covid-19 in FY 21-22, of which ₹100 crore of macro-prudential provisions were utilised in Q3FY25, it said in an investor presentation document.
“In the retail segment, home loans, tractors, LAP and SME continue to exhibit strong growth, with retail now contributing around 97 per cent to the loan mix. Stress in the MFI segment continues to remain pronounced and will run its course before conditions begin to improve,” said Motilal Oswal Financial while retaining Buy rating.
“Before utilisation of macro-prudential provisions, the total credit cost in the RGL and MFI business was estimated in the range of ₹950-₹1,000 crore for the full year FY25. Our advance estimates of the macro-prudential utilisation in Q4 is in the range of ₹300-350 crore,” L&T Finance added.
Morgan Stanley noted that MFI business collections remained tepid in the December 2024 quarter.
