L&T Finance share price climbs 3% despite dip in Q1 profit; Citi gives 'buy' call

L&T Finance Holdings (LTFH) share price rose about 3 percent in the morning trade on BSE on July 17, a day after the company reported a 73 percent decline in net profit at Rs 148 crore in Q1FY21 due to higher contingency provisioning.

LTFH further strengthened its balance sheet through provisions of Rs 577 crore over and above GS3 (gross stage 3) provisioning. Adjusted for above provisions, profit after tax (PAT) for Q1 FY21 stood at Rs 580 crore, the company said in a release.

Read more: L&T Finance Holdings Q1 net profit dips 73% to Rs 148 crore on higher provisioning

Global financial firm Citi has a 'buy' rating on the stock with a target price of Rs 80.

As per CNBC-TV18, Citi said LTFH's profit of Rs 150 crore is 35 percent lower than its as well as the consensus estimates.

Citi underscored that the company's profit was impacted by higher provisions made for COVID-19 and macro uncertainty.

LTFH's RoE fell from 10 percent in Q4 to 4 percent in Q1 which is 15 percent without additional provisions. The pressure on NIM and fees was partially offset by lower costs, said Citi.

On the other hand, Credit Suisse has an 'underperform' rating with a target price of Rs 50.

As per CNBC-TV18, the company is among the few NBFCs with consistent access to the bond markets while it looks comfortable on the liquidity front with Rs 9,000 crore.

"Its leverage at six times is high relative to the most peers. It may plan to raise capital buffers by stake sale in the subsidiary or equity raise," Credit Suisse said.

Shares of the company traded 1.76 percent higher at Rs 60.85 on BSE around 0940 hours.

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