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L&T Finance shares fall despite 20% rise in Q1 PAT; global brokerage sees strong upside

Global research firm Goldman Sachs has a buy on the stock with target at Rs 128 per share. "Marginal operating miss; disbursements bounced back in June. It sees diversification towards higher return generating retail business over long term. "Key risks are lack of clarity on strategic direction, asset quality challenges," it said.

July 19, 2021 / 11:17 AM IST
 
 
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L&T Finance Holdings share price was trading lower by over 2 percent intraday on July 19. The stock was trading at Rs 92.60, down Rs 2.25, or 2.37 percent. It has touched an intraday high of Rs 93.80 and an intraday low of Rs 91.05.

L&T Finance Holdings on July 16 reported 20 percent rise in net profit at Rs 178 crore for June quarter 2021-22, mainly driven by rural demand for farm equipment. The non-banking financial company had registered Rs 148 crore profit in the year-ago period.

LTFH said COVID-related partial lockdowns in April and May had an impact on few businesses during the quarter under review.

However, with gradual unlock of the economy from June, the disbursements bounced back led by faster pick-up in economic activity across farm equipment finance, two-wheeler finance, consumer loans and infrastructure finance.

Due to slower industry pick-up, the micro loans, housing and real estate business saw moderate uptick in collections and disbursements, it said.

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Also read: L&T Finance Holdings Q1 profit rises 20% to Rs 178 crore

The company's gross non-performing assets (NPAs) rose a tad to 5.75 percent during the quarter as against 5.24 percent in the year- ago period. Net NPAs or bad loans rose to 2.07 percent from 1.71 percent.

Global research firm Goldman Sachs has a buy on the stock with target at Rs 128 per share. "Marginal operating miss; disbursements bounced back in June. It sees diversification towards higher return generating retail business over long term. "Key risks are lack of clarity on strategic direction, asset quality challenges," it said, according to a CNBC-TV18 report.

Domestic research and broking firm Motilal Oswal has a buy on the stock. "The company reported a 1QFY22 PAT with a 35 percent miss. While NII was broadly in line, lower other income and higher opex (up 31% YoY) led to a PAT miss. Loan book fell ~11% YoY in 1QFY22, driven by a QoQ decline in micro loans, 2W finance, and real estate finance.

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"LTFH has been consolidating its loan book over the past many quarters, and we expect this to continue over the next 2-3 quarters. We expect disbursements in 2W/ML to pick up as collections improve. Restructured pool (including OTR 2.0) was contained at 2.6%, with a PCR of 14%. Gradual normalization in excess liquidity on the Balance Sheet will reduce the negative carry and support margin. We look to revise our estimates post the analyst call on July 19, 2021," it added.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
Moneycontrol News
first published: Jul 19, 2021 11:17 am

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