Motilal Oswal's research report on Larsen and Toubro Finance
LTF began FY26 on a stable footing, despite ongoing asset quality challenges in the MFI industry (more residual in nature), unsecured business loans and micro-LAP. The company continues to pursue a measured growth strategy, with a sharper focus on secured and prime segments, while effectively leveraging its proprietary underwriting platform, Project Cyclops, to reinforce credit discipline.
Outlook
We estimate a CAGR of ~22% in loans and ~25% in PAT over FY25-FY27, with consolidated RoA/RoE of 2.7%/~14% by FY27E. LTF will soon emerge out of the MFI credit cycle and will continue to deliver better profitability and RoA expansion. Reiterate BUY with a TP of INR260 (based on 2x Mar’27E BVPS).
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