L&T Finance Holdings Ltd. has reported a robust performance for the second quarter of the fiscal year 2025 (Q2 FY25), with a consolidated net profit of ₹695.58 crore, marking a 16.88% increase from ₹595.11 crore in the same period last year. This positive growth reflects the company’s strategic focus on expanding its retail business and managing its portfolio effectively amid a challenging macroeconomic environment.
Total income and profit before tax
The total income for L&T Finance in Q2 FY25 rose by 15.56% year-on-year (YoY), reaching ₹4,024.02 crore. This growth was bolstered by a significant increase in the company’s profit before tax (PBT), which surged by 17.83% to ₹939.57 crore, compared to ₹797.39 crore in Q2 FY24. The figures indicate that the company has successfully navigated market challenges while enhancing its income-generating capabilities.
Net interest income and margins
L&T Finance’s net interest income (NII) saw a commendable growth of 15% YoY, amounting to ₹3,527 crore for the quarter ending September 30, 2024. The net interest margin, along with fees and other income, stood at 10.86%, slightly up from 10.84% in the same quarter last year, reflecting improved efficiency in income generation.
Strong growth in retail book
The company’s retail loan book experienced impressive growth of 28% YoY, reaching ₹88,975 crore, while disbursements increased by 12% YoY to ₹15,092 crore. This upward trend highlights L&T Finance’s strong position in the consumer lending segment.
Sector-specific disbursement insights
- Rural Business Finance: Despite a slight decline in quarterly disbursements to ₹5,435 crore (down 5% from ₹5,741 crore in Q2 FY24), the book size saw a significant increase of 22% YoY, reaching ₹26,539 crore.
- Farmer Finance: Disbursements surged by 16% YoY to ₹1,782 crore, with the book size growing 9% YoY to ₹14,488 crore. This growth can be attributed to favorable monsoon conditions and steady reservoir levels, which have positively impacted agricultural financing.
- Two-Wheeler Finance: A remarkable increase of 32% YoY in disbursements to ₹2,393 crore was reported, with the book size climbing 33% YoY to ₹12,669 crore. This indicates a growing demand for two-wheelers, driven by consumer preferences and financing options.
- Personal Loans: Disbursements in this category increased by 4% YoY to ₹1,361 crore, with the book size rising 11% YoY to ₹7,178 crore.
- Housing Loans and Loans Against Property (LAP): This segment saw a staggering 46% increase in disbursements to ₹2,531 crore, with the book size up 42% YoY to ₹21,731 crore, reflecting strong collaboration with leading developers in prime locations.
- SME Finance: Disbursements in this category jumped 43% YoY to ₹1,244 crore, while the book size surged 115% to ₹5,190 crore, underscoring the company’s commitment to supporting small and medium enterprises.
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Management insights and future outlook
Sudipta Roy, Managing Director & CEO of L&T Finance, expressed optimism about the company’s growth trajectory despite the ongoing sectoral challenges. “The second quarter has been challenging due to various sectoral headwinds and a volatile macro environment. However, we have demonstrated sustainable growth and profits through proactive portfolio management and consistent collection strategies,” he stated.
Looking ahead, Roy indicated that the company may recalibrate its business objectives to prioritize positive credit outcomes over mere asset growth in light of anticipated ongoing challenges. He also highlighted the launch of Project Cyclops, a next-generation credit underwriting engine, which is expected to enhance the company’s operational efficiency and risk assessment capabilities.
Market response
Following the announcement of these positive results, shares of L&T Finance rose by 0.27%, closing at ₹166.65 on Friday, October 18, 2024. This uptick reflects investor confidence in the company’s strong performance and strategic initiatives aimed at sustaining growth.
L&T Finance’s strong Q2 results underscore its resilience and adaptability in a challenging market landscape. With robust growth across various lending segments and a focus on enhancing operational efficiency, the company is well-positioned to navigate future challenges and capitalize on emerging opportunities in the financial services sector.
