MOSL: L&T FINANCE HOLDINGS (Buy)-Steady quarter-‘Retailization’ theme continues
L&T Finance Holdings: Steady quarter; ‘Retailization’ theme continues
(LTFH IN, Mkt Cap USD3.8b, CMP INR131, TP INR170, 30% Upside, Buy)
- 4QFY19 PAT almost doubled YoY to INR5.5b, 7% below our estimate. The company reversed INR840m of interest income on ‘amber’ IL&FS accounts, leading to the PAT miss. Adjusting for this, PAT would have beaten our estimate by 2%.
- The focused loan book grew 5% QoQ/ 17% YoY to INR983b driven by strong growth in rural and housing finance. Over the past four quarters, share of rural and housing finance increased from 42% to 51%. During the quarter, the strongest growth came from microfinance, 2W finance and real estate finance, while the company scaled back a bit in tractor finance.
- Excluding impact of the interest reversal, calculated margins (incl. fee income) were stable QoQ at 6.4%. Operating expenses grew 25% YoY to INR6.5b. However, excluding ‘net loss on fair value changes’, operating expenses were up only 3% YoY, which is impressive considering investments in the retail franchise.
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.
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