MOSL: L&T FINANCE HOLDINGS (Buy)-Core business robust-Provisioning hit of INR18b (pre-tax) taken directly to reserves
L&T Finance Holdings: Core business robust; Provisioning hit of INR18b (pre-tax) taken directly to reserves
(LTFH IN,Mkt Cap USD5b, CMP INR171, TP INR240, 41% Upside, Buy)
- L&T Finance Holding's (LTFH) 1QFY19 PAT grew 71% YoY to INR5.4b (our estimate under IGAAP was INR4.1b), driven by strong AUM growth (+27% YoY) and flat credit costs during the quarter.
- Focused loan book grew 27% YoY to INR854b, driven by YoY growth of 76% in rural lending, 48% in housing finance and 7% in wholesale lending. The share of retail lending (rural and retail housing finance) increased further to 33% from 30% a quarter ago and 27% a year ago. Management guided for slowdown in rural lending growth to 30%+ due to a high base. LTFH continues gaining market share in tractor finance.
- Gross stress loan ratio (stage 3 under ECL) improved from 11.7% a year ago to 7.9%, while PCR improved from 51% to 62% over this time frame. Reduction in the stage 3 loans ratio was largely driven by wholesale and rural finance.
- Provision expense for the quarter was largely flat YoY at INR4.4b. This includes additional contingency provisions of INR900m in rural and INR920m in wholesale finance. In our estimates, we continue building additional contingency provisions throughout FY19 and FY20. As a result, we reduce FY19E credit costs by only INR6b, while FY20E credit costs are largely unchanged.
L&T Finance Holdings Limited is a non-banking financial institution-core investment company. The Company's segments include Retail and Mid Market Finance, which consists of rural products finance, personal vehicle finance, microfinance, housing finance, commercial vehicle finance, construction equipment finance, loans and leases and loan against shares; Wholesale Finance, which consists of project finance and non-project corporate finance to infra and non-infra segments across power-thermal and renewable; transportation-roads, ports and airports; telecom, and other non-infra segments; Investment Management, which consists of assets management of mutual fund and private equity fund, and Other Business, which consists of wealth management and financial product distribution. It offers a range of financial products and services across retail, corporate, housing and infrastructure finance sectors, as well as mutual fund products and investment management services.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.