L&T Finance Holdings Ltd (LTFH), promoted by L&T Ltd (64.2%) is a leading NBFC with a diversified lending portfolio. Over the last two year the management has restructured its business model and is focusing on selective segments where it has competitive advantage, simultaneously downsizing some products which were making losses.

Outlook & Valuation: We expect going forward advance to grow at healthy CAGR of 24% over FY17-FY20E, primarily owing to focused lending segment (rural, housing and wholesale) and better managed credit cost would further help to improve return ratio. At CMP LTFH is trading at 2.5x of FY20 AdjBV. We recommend a Buy rating on the stock, with a target price of `210.

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