Sharekhan's research report on Larsen and Toubro Finance Holdings
LTFH’s legacy wholesale book has been running down faster, and a favourable cycle is helping its retail business to grow rapidly. The wholesale book declined by 65% y-o-y and 28% q-o-q due to a larger sell-down/prepayment. The retail book grew by 34% y-o-y/5% q-o-q. Share of retail assets rose to 82% of loan book vs. 75% q-o-q. The company is looking to run down a majority of the wholesale book by the end of FY2024E. Thus, the diminishing wholesale book will constrain net loan growth and RoE in FY2024; however, from FY2025, growth in retail franchise would uplift loan growth and RoE.
Outlook
We maintain our Buy rating with a revised PT of Rs. 155. At the CMP, the stock trades at 1.4x/1.2x its FY2024E/FY2025E BV.
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