Emkay Global Financial's research report on Larsen and Toubro Finance Holdings
Subsequent to discontinuing its painful “focused-defocused segments” strategy, LTFH is on the brink of completing the successful execution of its ‘Lakshya 2026’ led retailization plan. Now, its retail assets comprising of over 90% of the loan book, its sustainable moats in Rural, 2W and Farm Equipment segments, and a strong balance sheet with material macro-prudential provisions and a prudent asset valuations buffer give enough comfort on sustained profitable growth. Against this backdrop, Sudipta Roy—a seasoned retail lending professional with a strong tech & analytics bent—taking over as CEO shores up LTFH’s endeavor towards achieving consolidated RoA of 3% in FY26E & beyond, with the established retail business firing on all cylinders and given some optionality from Company’s entry into adjacencies such as cards, micro-LAP, and gold loans.
Outlook
We marginally tweak our FY24-26 estimates and upgrade the stock to BUY from Reduce, with revised Dec-24E TP of Rs190/sh (up from the earlier Sep-24E TP of Rs155), implying FY25E P/B of 1.8x.
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