Buy Larsen and Toubro Finance Holdings; target of Rs 109: Prabhudas Lilladher

Prabhudas Lilladher's research report on Larsen and Toubro Finance Holdings

LTFH should also run-down the remaining wholesale book as quickly as possible (at the right valuations). The company utilized gain from sale of MF business for one-time exceptional provisions of ~Rs 26.9bn, to enable accelerated sell-down of wholesale book accounting for certain illiquidity premium that can arise from the sale. We believe that if management can achieve Lakshya goals and continue to show strong growth in retail book, there can be re-rating in the stock. Maintain ‘BUY’.

Outlook

We maintain ‘BUY’ rating and increase our TP to Rs109 (1.25x on Sep’24E PABV) from Rs88 (earlier:1x Sep’24E PABV) as we increase our NII estimates for FY23/24/25 by 0.2%/3.4%/3.4%, given increase in yields to 13.2%/13.5%/13.5% for FY23/FY24/25 from 13.1%/13.2%/13.2% earlier.

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