Buy Larsen and Toubro Finance; target of Rs 225: Anand Rathi

Anand Rathi's research report on Larsen and Toubro Finance

With its shift to a retail franchise ahead of its Lakshya 2026 target, L&T Finance’s Q1 consolidated net profit surged ~29.2% y/y to Rs6.85bn. We maintain our Buy rating as the shift to retail is paying consistent dividends. On higher estimates, we value the stock at 1.9x FY26e BV (earlier 1.8x FY26e) for an expected 2.5%+ RoA in FY26.

Outlook

Our Rs225 TP is based on the two-stage DDM model. This implies a ~2.1x P/BV and a ~1.9x P/BV on the company’s respective FY25e and FY26e BV.