L&T Finance Shares in Focus: PAT Grew 2%, NIM Fell 60 BPS During Q3FY25

On January 20, 2025, L&T Finance Limited announced its financial results for the third quarter of FY25 (Q3FY25) and the nine months ended December 31, 2024 (9MFY25).

L&T Finance Q3FY25 Earnings Overview

L&T Finance posted a PAT of ₹ 626 Crore, a decrease of 2% compared to ₹640 Crore in Q3FY24. The company reported a NIM of 10.33%, a 60 bps decline from 10.93% in the same quarter last year. The total book size grew by 16% YoY, reaching ₹95,120 Crore, compared to ₹81,780 Crore in Q3FY24. The RoE stood at 10.21%, down 114 bps from 11.35% YoY.

Retailisation and Asset Growth

L&T Finance’s retail book stood at ₹92,224 Crore, reflecting a 23% YoY increase from ₹74,759 Crore. The company continues to prioritise retail assets, with retailisation reaching 97%.

Asset Quality

• Gross Stage 3 (GS3): The GS3 ratio was slightly up at 3.23% in Q3FY25 compared to 3.21% in Q3FY24.
• Net Stage 3 (NS3): The NS3 ratio increased to 0.97% from 0.81% YoY.
• Credit Cost: The credit cost before macro utilization stood at 2.91%, an increase from 2.59% in Q2FY25, mainly driven by challenges in the Rural Business Finance (RBF) segment.

Robust Retail Franchise

L&T Finance has a strong retail franchise across India, supported by an extensive distribution network and deep customer database. The company operates in approximately 2,00,000 villages and over 185 urban branches, enabling it to maintain a broad reach. Additionally, its 2.5 Crore customer base contributes significantly to disbursements, with 32% of the total value and 43% of the disbursement count coming from this retail base in Q3FY25.

L&T Finance Segment-Wise Performance

Rural Business Finance

• Book Size: ₹26,231 Crore, up 14% YoY from ₹23,110 Crore.
• Disbursements: ₹ 4,599 Crore, down 16% YoY, reflecting a cautious approach due to macroeconomic challenges.

Farmer Finance

• Book Size: ₹15,075 Crore, up 9% YoY from ₹13,845 Crore.
• Disbursements: ₹ 2,495 Crore, up 23% YoY, driven by favourable monsoon conditions and increased demand during the festive season.

Two-Wheeler Finance

• Book Size: ₹12,676 Crore, up 21% YoY from ₹10,447 Crore.
• Disbursements: ₹2,414 Crore, down 5% YoY, reflecting a more conservative disbursement strategy with stronger credit quality checks.

Personal Loans

• Book Size: ₹7,820 Crore, up 22% YoY from ₹6,427 Crore.
• Disbursements: ₹ 1,642 Crore, a significant 94% increase YoY, driven by digital partnerships and the growth of prime customer segments.

Housing Loans and Loans Against Property

• Book Size: ₹23,461 Crore, up 41% YoY from ₹16,654 Crore.
• Disbursements: ₹2,475 Crore, up 24% YoY, reflecting strong demand in the housing and property loan segments.

Commenting on the financial results, Mr. Sudipta Roy, Managing Director & 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. Our investments and efforts towards building a world-class credit underwriting and monitoring infrastructure continued unabated. Apropos to the same, our next-generation three-dimensional credit underwriting engine ‘Project Cyclops’ was extended to 100% of dealerships in Two-wheeler Finance and was also operationalized for the Farm Equipment Finance business.”

He further added,” In our pursuit of innovation within the lending landscape, LTF launched a strategic partnership with Amazon Pay to develop and offer cutting-edge credit solutions through the platform. We also extended the PhonePe partnership to Personal Loans, delivering a seamless digital lending experience to our consumers. Additionally, we have launched Knowledgeable AI (KAI), an AI-powered chatbot that revolutionizes the home loan experience. We were also delighted to host RAISE’ 24, India’s premier AI-themed event in the Banking, Financial Services, and Insurance (BFSI) sector focused on Al’s real-world applications. As we look ahead, we remain dedicated to driving innovation and enhancing our offerings to better serve our customers.”

On January 21, 2024, L&T Finance shares opened at ₹141.15 and touched the day high of ₹144.80 at 09:30 AM

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