🌟 Stock of the Week: L&T Finance Ltd. (NSE: LTF)

Hello ,

This week, we spotlight L&T Finance Ltd., a leading NBFC from the L&T Group, which has shown steady growth with a sharp retail focus and improving fundamentals. Backed by its strategic digital initiatives, strong disbursement momentum, and improving asset quality, LTF has delivered consistent returns across GoalFi portfolios.

🌟 Stock of the Week: L&T Finance Ltd. (NSE: LTF)
📅 Featured in: Multi Factor – Sept Cohort & many other GoalFi baskets
🚀 Return Since Entry (₹231.7): +13.22%
📈 +7.6% QoQ Net Profit Growth | +15% YoY Sales Growth | ROE: 10.8%

🏦 Company Overview

L&T Finance Ltd. is a systemically important NBFC-CIC, offering a broad suite of financial products with AUM of ₹97,762 Cr in FY25. The company has shifted towards retail-dominated lending (97% of AUM in FY25 vs 76% in FY23), reflecting stronger asset quality and reduced concentration risk.

Business Segments:

• Urban Finance (56% AUM) – 2W Finance, Home Loans, LAP, Personal Loans, SME Finance

• Rural Finance (44% AUM) – Farmer Finance (₹7,427 Cr disbursed, ~96,000 tractors financed) & Rural Business Finance (₹20,472 Cr disbursed in FY25)

📊 Financial Highlights

• Market Cap: ₹65,579 Cr | CMP: ₹262 | P/E: 24.7x

• Net Profit (FY25): ₹2,643 Cr (vs ₹2,317 Cr in FY24)

• Operating Profit Margin: 61% | ROE: 10.8% | ROA: 2.44%

• CRAR: 22.3% | NIM: 8.7% | GNPA: 3.29% (improved from 4.74% in FY23)

Quarterly (Q1FY26 – June 2025):

• Sales: ₹4,260 Cr (up 12.6% YoY)

• Net Profit: ₹701 Cr (up 2.3% QoQ, 15% YoY)

• EPS: ₹2.81 (up from ₹2.75 last quarter)

✅ Pros & ❌ Cons

Pros:

• Healthy dividend payout of ~28%

• Strong retail franchise with growing disbursements

• Improving asset quality (GNPA and NNPA declining)

• High NIM at 8.7%

Cons:

• Stock trades at 2.56x P/BV (premium valuation)

• Low interest coverage ratio

• Weak 5-year sales growth (2.4% CAGR)

• Historically low ROE (7.2% avg over 3 years, though improving now)

📌 Shareholding (June 2025)

• Promoters: 66.16%

• FIIs: 6.19%

• DIIs: 14.10% (steady accumulation trend)

• Public: 13.55%

🔎 GoalFi View

L&T Finance has successfully pivoted towards retail-led growth and digital-first strategy, which should support sustained profitability and asset quality improvement. The company’s recent entry into gold loan financing (acquisition of Paul Merchants Finance portfolio) and rollout of AI-ML driven Project Cyclops 2.0 further strengthens its long-term growth outlook.

While valuations look slightly stretched, LTF remains a structurally positive play on India’s NBFC growth story, making it a solid candidate in GoalFi’s Wealth Maximizer and Multi Factor portfolios.

Stay calm, stay invested, and let compounding do the magic. ✨

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