L&T Finance enters gold loan business with Rs 537-crore acquisition of PMFL business

L&T Finance shares have rallied 10 percent since the start of the year.

L&T Finance, one of India's leading Non-Banking Financial companies, has announced its foray into the gold loan business by acquiring Paul Merchants Finance Pvt. Ltd.'s (PMFL) gold loan segment. This franchise will be an addition to the company's portfolio of secured loan products.

L&T Finance also added that this is an all-cash deal with a lumpsum consideration of Rs. 537 crore along with certain adjustments to be done till closing, on a slump sale basis. The agreement is subject to necessary approvals and the fulfilment of all conditions precedent to closing. The business transfer is expected to close by the second quarter of the financial year 2025-26.

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"The proposed acquisition includes a fully operational network and security centre for 24/7
remote monitoring of all gold loan branches, strategically located in less penetrated markets
like Chandigarh, Punjab, Haryana, Delhi, Rajasthan, Gujarat, Madhya Pradesh, and Uttarakhand. It also brings approximately 700 employees and 130 branches," the company said in a regulatory filing on February 7.

Speaking on this occasion, Sudipta Roy, Managing Director & CEO of LTF said "We
are committed to delivering sustainable growth and attractive returns, and this proposed
acquisition is a significant step in that direction." He added that the gold loan business undertaking will fill the gap of a secured high-yield product in the portfolio in both rural and urban. It accelerates the gold loan business time-to-scale by 36 months, providing approximately Rs 1,000 crore in assets under management and over 98,000 active customers in an easily integrable business profile.

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L&T Finance Holdings posted a net profit of Rs 626.4 crore in Q3 FY25, down 2.1 percent year-on-year from Rs 640 crore. Sequentially, profit declined by 10 percent. The NBFC major's net interest income (NII) rose 11.4 percent to Rs 2,041 crore from Rs 1,833 crore a year ago but fell short of analysts’ expectations of Rs 2,120.8 crore.

Asset quality also saw a slight dip, with gross non-performing assets (NPA) inching up to 3.23 percent from 3.19 percent in the previous quarter, while net NPA stood at 0.97 percent, compared to 0.96 percent in Q2 FY25. Interest income grew 15.1 percent year-on-year to Rs 3,806.38 crore from Rs 3,306.30 crore and rose 4.2 percent sequentially from Rs 3,654.41 crore.

L&T Finance shares closed at Rs 149, lower by 1 percent from the last close on the NSE. L&T Finance shares have rallied 10 percent since the start of the year.

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