Buy Larsen and Toubro Fin Holdings; target of Rs 200: Motilal Oswal

Motilal Oswal is bullish on Larsen and Toubro Fin Holdings recommended buy rating on the stock with a target price of Rs 200 in its research report dated January 25, 2024.

Broker Research

January 29, 2024 / 20:18 IST

Neutral

26 Aug, 2025 12:21

Volume

Todays L/H

Motilal Oswal's research report on Larsen and Toubro Fin Holdings

L&T Finance Holdings (LTFH) reported PAT of INR6.4b (in line) in 3QFY24. PPOP grew ~7% YoY to INR13.4b (in line), while credit costs of ~INR5.1b translated into annualized credit costs of 2.5% (vs. 2.6% in 2QFY24 and 2.7% in 3QFY24). In 9MFY24, PAT grew ~58% YoY to INR17.7b. Consolidated RoA/RoE rose 10bp/55bp QoQ to ~2.5%/~11.4% in 3QFY24. Retail RoA also improved ~10bp QoQ to ~3.4%. Retail loans grew ~8% QoQ/31% YoY, propelled by healthy growth in MFI, Home Loans and 2W. Personal loans exhibited a temporary blip in growth momentum but should resume the growth trajectory from 4QFY24 onward. Mr. Sudipta Roy (ex-ICICI Bank) has succeeded Mr. Dinanath Dubhashi as MD and CEO. Mr. Roy will look to leverage his extensive experience to further strengthen the franchise. We expect that the retail mix will improve to ~94-95% by Mar’24 from 91% as of Dec’23. Considering the accelerated rundown in the wholesale book, we model consolidated loan growth of 18% and PAT CAGR of 34% over FY23- FY26E, with consolidated RoA/RoE of 2.7%/~15% in FY26E. A strong liability franchise, a well-capitalized balance sheet and a keen intent to further accelerate the sell-down of the wholesale book have helped LTFH achieve its Lakshya 2026 targets much in advance.

Outlook

LTFH has transformed itself into a retail franchise, which would lead to profitability improvement and RoA expansion. Retain BUY with a TP of INR200 (based on 1.8x FY26E BVPS).

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