L&T Finance Holdings Ltd. records Q2FY24 Profit After Tax (PAT) of Rs. 595crore (Consol.) up 46% Year-on-Year (YoY)
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Metamorphosizing into a Fintech@Scale by achieving Lakshya 2026 goals ahead of timePLANET app crosses 60 lakh downloads
* Achieved highest ever quarterly Retail disbursements at Rs. 13,499 crore, up 32% YoY driven by a robust business model, strong growth across all retail segments coupled with top-notch digital and data analytics
* Retail portfolio mix now standsat 88% of the total loan book; continued to outperform the Lakshya 2026 goal of achieving greater than 80% Retailisation
* Continued with the accelerated reduction in the Wholesale book with a steep reduction of 76% YoY, which translates toa reduction of Rs. 28,740 crore in line with Lakshya 2026 strategy of gaining momentum towards becoming a top-notch, retail finance company
* PLANET app crossed 60 lakh downloads;powering up with digital technology towards becoming a Fintech@Scale
* Obtained NCLT approvals for the proposed merger of entities;a step closer to creating a single lending entity
Update on Lakshya 2026 goals at the end of Q2FY24:
Retail
Performance for Q2FY24
* Q2FY24 Retail PAT at Rs. 606 crore, up 86% YoY, on the back of strong Net Interest Margins (NIMs) + Fees (12.16% in Q2FY24 vs. 11.33% in Q2FY23) and reduction in credit cost (2.74% in Q2FY24 vs. 3.46% in Q2FY23)
* Highest ever quarterly Retail disbursements at Rs. 13,499 crore,
up 32% YoY vs. Rs. 10,238 crore in Q2FY23
* Retail booksizeup 33% YoYat Rs. 69,417crore
vs. Rs. 52,040crore in Q2FY23
* Retail portfolio mix at 88% in Q2FY24
compared with 82% in Q1FY24and 58% in Q2FY23
* Improved Retail Asset Quality with GS3 at 3.05%
and NS3 at 0.67% with a provision coverage ratio of 79%
* RetailRoAat 3.32%, continued to outperform against the Lakshya
FY26 target.
* RetailReturn on Equity (RoE)at 16.31%
Consolidated Performance:
* PAT stood at Rs. 595 crore,up 46% YoYin Q2FY24 from Rs. 406 crore in
Q2FY23
* NIMs up by 11% YoY at Rs. 1,729 crore in Q2FY24 vs. Rs. 1,563 crorein
Q2FY23
* Credit Cost down by 10% YoY at Rs. 517crorein Q2FY24 vs. Rs. 575crore in
Q2FY23
* Strong
Balance Sheet with a Capital Adequacy Ratio of 25.16% (Tier 1:22.99%) in Q2FY24 and adequate liquidity buffers in place
* Rated ‘AAA’ by CRISIL, ICRA, CARE and India Ratings
The Board of L&T Finance Holdings Ltd.
(LTFH),one of the leading Non-Banking Financial Companies (NBFCs) in India
today announced the financial results for the second quarter ended September 30,
2023. Under Lakshya 2026, the Company is accelerating its journey toward
becoming a top-class, digitally-enabled, and customer-focused Retail financier.
LTFH is amongst the leading financial
institutions offering Rural Group Loans & Micro Finance,Farm Equipment Loans,Two-Wheeler
Loans, Personal Loans, Home Loans & Loan Against Property as well as SME
Loans. With a sustainable business model, data analytics-led collection and
disbursements, a customer-centric approach and a sharp focus on asset quality,
the Company remains committed to building a stable and sustainable organisation
for all its stakeholders.
Commenting on the financial results, Mr.
Dinanath Dubhashi, Managing Director & CEO, L&T Finance Holdings Ltd. said,“After
having achieved most of our Lakshya 2026 goals, it gives me immense pleasure to
announce that we havecontinued the trajectory of metamorphosizing into a top-notchRetail
finance Company. During the quarter, LTFH not only reached a retail portfolio
mix of 88%,but also achieved the highest ever quarterly Retail disbursements of
Rs. 13,499 crore, registering a growth of 32% YoY. This achievement is
attributed to the twin strategy of strongly growing the retail asset book on
one side and ensuring a sharp reduction in the wholesale book on the other,
while maintaining best-in-class asset quality.
On the fintech front, our customer facing
application PLANET has crossed 60 lakh downloads as of date and is constantly evolving to offer exciting features to our
customers, while servicing most of their requirements.
Going forward, we will continue to focus on sustainably delivering Lakshya goals through a concentrated focus on 5 key pillars, namely enhanced customer acquisition, sharpening credit underwriting, implementing futuristic digital architecture, heightened brand visibility and capability building.At LTFH, we strongly believe that the Retail segment holds promising opportunities, and we will continue to grow and ride this growth by scaling up our product portfolio, customer touchpoints, capability enhancements, and use of data analytics in doing business. We will sustain our growth momentum and continue to work towards creating a customer-focusedand sustainable Fintech@Scale. The Company will continue to develop digital finance delivery as a customer value proposition thereby touching every part of the customer ecosystem through our digital offerings.”
Key Highlights:
A. Robust Retail Franchise
The Company’s granular and deep pan India Retail franchise is led by its marquee
distribution capabilities namely, its geographic presence in around 2,00,000
villages from 1,700 plus rural meeting centers/branches and over 150 branches
across urban centers,servicing over 90 lakh active customers. This extensive
geographic presence is also supported by 9,500 plus channel relationships built
over a decade. The Company also leverages
its 2.2crore plus customer database to drive a credible cross-sell and up-sell franchise,
with up-sell contributing to 38% of the Company’s quarterly disbursements.
B. Healthy Retail disbursements and book
The
Retailportfolio mix now stands at 88% of the total loan book with strong Retail
disbursement of Rs. 13,499crore
(up 32% YoY) and Retail book at Rs. 69,417crore (up 33% YoY).
* Rural Group Loans & Micro Financeregistered
its highest ever quarterly disbursements during Q2FY24 at Rs. 5,740crore,
recording a YoY growth of 30%.This growth was aided by a strong disbursal run
rate of over Rs. 1,900 crore, in the month of July and August 2023, coupled
with an optimized geographic mix which saw increased contribution from southern
states. Additionally, there was a focus on strengthening customer retention
with a substantial share of vintage borrowers that also encouraged growth for
the segment. As for the book, it saw a growth of 37% YoY and stood at Rs.
21,672 crore vs. Rs. 15,840 crore in Q2FY23.
* Farm Equipment Finance
disbursements during Q2FY24 saw a YoY growth of 18% at Rs. 1,534crore vs. Rs.
1,304 crore in Q2FY23. The business witnessed growth on the back ofanalytics
driven dealer relationships leading to higher counter share with top dealers
and focused customer retention through top up products. In addition, a 15% YoY
growth in disbursements was registered towards the New Tractor segment coupled
with enhanced customer retention through Kisan Suvidha, the top-up and
refinance product which contributed 25% of disbursements.The book size
registered a growth of 13% YoY and stood at Rs. 13,351crore vs. Rs. 11,865crore
in Q2FY23.
* Two-WheelerFinance
disbursements during Q2FY24 saw a YoY growth of 6% at Rs. 1,817crore vs. Rs.
1,721 crore in Q2FY23. The Company continues to focus on analytics driven
dealer relationshipswhile building a robust network of dealerships through new
initiatives. During the quarter LTF financed 7,350 Electric Vehicles (EV) and
partnered with Ather Energy to finance up to 100% of the loan-to-value on
purchase of Two-Wheeler Electric Vehicles (EVs). The book size registered a
growth of 18% YoY at Rs. 9,518 crore vs. Rs. 8,093 crorein Q2FY23.
* Personal
Loanssegment continued to
scale up while protecting portfolio quality with a disbursement ofRs. 1,308 crore
in Q2FY24 (up 13% Quarter-on-Quarter).During the quarter, the book size reached
Rs 6481 crore, with the entire focus being put on reimagining journeys while
leveraging the existing customer database and scaling up the e-aggregator
channel.
* Home
Loans and Loans Against Property (LAP)disbursements showed sustained growth momentum in Q2FY24 with Home Loan
disbursements witnessing a YoY growth of 34% to Rs. 1,356 crorevs. Rs. 1,013 crore
in Q2FY23while LAP disbursements registering disbursement of Rs. 378 crore
against Rs. 104 crore in Q2FY23. As for the book size, Home Loan grew by 34%
YoY and stood at Rs. 12,216 crore vs. Rs. 9,105 crore whereas for the LAP
business it saw a growth of 14% YoY and stood at Rs. 3,038 crore vs. Rs. 2,665 crorein
Q2FY23.
* SME
Loans also registered robust
growth with Q2FY24 disbursements at Rs. 872crorevs. Rs. 201crorein Q2FY23. During
the quarter,the book size reached Rs. 2,413crore, driven by increased
geographical presence and concerted efforts towards digitization and channel
expansion.
* Maintained
strong collection efficiency across Retail businesses through enhanced
on-ground efforts, digital initiatives, and data analytics-based resource
allocation.
C. Accelerated Reduction of the Wholesale Portfolio
The
Wholesale book continued to witness an accelerated and steep reduction. As of
Q2FY24, the Wholesale book stood at Rs. 9,318 crore, a reduction of 76% YoY. In
absolute terms, the Wholesale book reduced by Rs. 28,740 crore YoY from Rs.
38,058 crore as of Q2FY23. On a sequential basis the Wholesale book saw a
reduction of 35% from Rs. 14,292crore as of Q1FY24. This accelerated reduction
of the Wholesale book is in line with our Lakshya 2026 strategy of strongly
growing the Retail while sharply reducing Wholesale.
D. Building a Fintech@Scale
LTFH is developing digital
finance delivery as a customer value proposition. The Company is focused on
touching every part of the customer ecosystem and has a customer-focused
digital first approach not only in urban areas but also in rural areas. LTFH
offers 100% paperless journey in Rural Group Loans and Micro Finance,
Two-wheeler Finance, Farm Equipment Finance and Personal Loans and has digitally
disbursed 100% of the loans in urban and rural areas during the quarter. The
Company continues to cross-sell and up-sell to its large database of more than
2.2 crore customers by leveraging technology and using data analytics. Out of
this customer database, the share of up-sell in disbursement stood at 38% thus
implying an active customer franchise of over 90 lakh customers with
disbursement per up-sell franchise standing at nearly Rs. 86,000/-. Additionally,
during Q2FY24 loans were disbursed to more than 6.4 lakh new customers.The
ability of the Company to deliver industry-leading collection efficiencies and
Turn-Around-Time across Retail products isa visible result of adopting a
Fintech@Scale approach.
Our customer facing application - PLANET app,
which was soft launched in Q4FY22 has emerged as a powerful digital channel for
our customers. It is built on the foundation of reimagining customer engagement
by creating an augmented Direct 2 Customer (D2C) channel. The app serves as a
geo-agnostic sourcing, collections, and servicing channel with customer-centric
features. The app also provides multiple other
features like Mandi Prices, Insurance Marketplace, Credit Score, etc. The app has
already crossed 60 lakh downloads till date, which also comprises of more than 7.8
lakh downloads by our rural customers. As on date this channel has done
collections of more than Rs. 570crorewhile servicing more than 93 lakh requests
and sourcing loans of more than Rs. 4,100crore (including web).
E.
Moving to a Single Lending Entity
In the fourth quarter of FY23, LTFH initiated the merger
of its subsidiaries - L&T Finance Ltd., L&T Infra Credit Ltd., and
L&T Mutual Fund Trustee Ltd. with itself i.e., the equity-listed holding
company. This strategic initiative was undertaken with the intent of having the
‘Right Structure’ in place. The proposed merger proposal has been approved
by the NCLT at Mumbai and Kolkata and this takes LTFH closer to creating a
single lending entity, subject to remaining regulatory approvals.
F. ESG and CSR initiatives
When it comes to ESG and CSR, the Company has been at the
forefront. The following are the key developments during the quarter:
* ~433 tCO2e emission avoided by
switching to green power across LTF branches; 95% of LTF branches in
Maharashtra operate on green power
* 7,350 Electric Vehicles financed
in Q2FY24, in line with our ESG commitments
* Shramdaan, towards “Swachhata Hi Seva”a cleanliness drive for creating
“Garbage Free India” across 650+ locations
* Our flagshipDigital Sakhi
project launched in Gorakhpur (Uttar Pradesh), Supaul (Bihar) and
Murshidabad (West Bengal) with an aim to create digital & financial
literacy amongst 15,00,000+ community members over the next 4 years.
Additionally, another 4,50,000 plus community members outreached under the
initiatives across Karnataka, Kerala, West Bengal, Odisha & Tamil Nadu
* 7,750 Relief kits distributed to
flood affected people of Punjab, Haryana, and Odisha
* Over 50,000 saplings planted
under Project Prakruti across 140 plus acres of land in Tumkur district,
Karnataka
* Created Road Safety awareness amongst 6,000 plus school children from municipal schools in Mumbai
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