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L&T Finance Holdings has
recorded 28% increase in net profit to Rs 342.24 crore in the quarter ended March
2022 (Q4FY2022). PBT of the company declined 36% to Rs 419.11 crore. The company
has strengthened financial performance with continued on-ground efforts and
utilization of data analytics for decision making.
NIM+ Fees increased 7 bps qoq to 8.17%
and on same levels as Q4FY21. NIMs + Fees for FY22 at 7.84%, up 89 bps YoY. The
company has exhibited decline in credit costs to Rs 651 crore for the quarter.
The company has maintained healthy
business momentum backed by inherent business strengths, while also accelerated retailisation momentum. The loan
growth of the company has reversed declining trend rising 3% on sequential
basis in Q4FY2022, after decline for last four quarters. The company has
recorded all-time high retail quarterly disbursements of Rs 8100 crore,
showing growth of 22%. Retail portfolio
mix improved to 51% end March 2022 up from 43% end March 2021 with
retail book rising 6% qoq.
The
company has reduced at 7.34%, down 13 bps QoQ. Reduction in quarterly WAC by 31
bps YoY and well protected from liquidity tightening and increase in interest
rates.
GS3
at 3.80% in Q4FY22; PCR at 48%; NS3 at 2.00%. Adequate additional provisions of
Rs. 1,727 Cr (2.10% of standard assets) over and above GS3 provisions and ECL
on standard assets
Commenting on the financial results Dinanath
Dubhashi, Managing Director & CEO, L&T Finance Holdings, said, “LTFH’s
results this quarter reflect our continuing focus on our stated strategy of
retailisation of our business mix. The retail disbursements are at an all-time
high owing to sustained focus on our business strengths as well as deep
integration of data analytics in our decision-making process. The continued
upswing in existing products and increased traction in new products bodes well in
our journey to become a top-class retail finance company with over 80% retail
book by 2026.”
Dubhashi further added, “The existing
strengths built over the years places the company in great stead for the next
phase of growth. LTFH has set up a goal of being a top-notch retail finance
company by 2026, with growth originating from a ‘customer-focused’ approach,
consisting of both native as well open market borrowers. This will be built on
our strong digital & analytical abilities, allowing us to identify need of
the customer and fulfilling them through our product offerings, which will
multiply multifold in the near future.”
Quarterly
performance
The
consolidated income from operations declined 9% to Rs 2918.75 crore for the
quarter ended March 2022, while other income of the company dipped 45% to Rs 148.41
crore. The total income declined 12% to Rs 3067.16 crore for Q4FY2022. Interest
expenses eased 14% to Rs 1392.26 crore. Operating expenses increased 4% to Rs 575.65
crore, causing the operating profits to decline 17% at Rs 1099.25 crore. The
cost-to-income ratio rose to 34.4% in Q4FY2022 from 29.5% in Q4FY2021. Depreciation
increased 26% to Rs 27.78 crore, while provisions were flat at Rs 652.36 crore.
Profit before tax declined 36% yoy basis at Rs 419.11 crore. Effective tax rate
dipped to 30.8% in Q4FY2022 from 67.8% in Q4FY2021. Net Profit of the company,
after share in profit of associates and non-controlling interest, improved 28% to
Rs 342.24 crore for Q4FY2021 including net profit from discontinued operation
of Rs 51.17 crore
Book value per
share of the company stood at Rs 80.6 per share at end March 2022. Adjusted
book value (net of NNPA and 10% of restructured loans) per share of the company
stood at Rs 72.6 per share at end March 2022.
Business
performance
Disbursement
The inherent business strengths of
LTFH helped the Company remain one of the leading retail financiers during the
industry contraction phase of Farm Equipment and Two-Wheeler Financing. The
retail book grew 6% QoQ, on the back of highest ever Q4 disbursements,
supported by strong growth in Micro Loans and Consumer Loans businesses. Total
disbursements in the quarter for retail businesses stood at Rs 8105 crore, up
22% YoY, with Farm Equipment Finance, Two-Wheeler Finance and Consumer Loans
businesses achieving all-time high annual disbursements.
Retail Businesses: The portfolio
became the largest segment in LTFH, with a growth of 10% YoY.
a. Farm Equipment Finance: The Company
showcased strong performance with all-time high annual disbursements despite
industry slowdown, by working on preferred dealer / OEM strategy and maintained
its market share. Increased focus on lending to existing customers, also
contributed to the performance.
b. Micro Loans: Increased volumes in
disbursements during the quarter, which stood at Rs 3881 crore was driven by
normalization of collections and better than industry asset quality. The Company
continues to deepen the channel presence and further geo-diversification will
lead to future growth.
c. Two-Wheeler Finance: The all-time
high disbursements in business, despite market slowdown, was delivered by
working on business strategy built around dominating counter shares of preferred
partners and increasing application of data analytics.
d. Consumer Loans: LTFH’s first ‘digital
native’ business achieved disbursements of Rs 798 crore in Q4FY22 with annual
disbursements reaching Rs 2254 crore. In addition to cross-sell to existing customers,
the business is focusing on non-captive customers, targeted towards responsible
end-use ecosystem, to fuel future growth.
e. Retail Housing: Disbursements
showcased steady uptick in the quarter, up by 29% QoQ and 34% YoY. The Company
has revamped its offerings to both salaried as well as SENP segments. In
addition to existing products and to further accelerate retailisation, the
Company has currently undertaken a pilot launch of SME loans, with end-to-end
digital journey and use of analytics to deliver value added proposition for
customers & channels.
Wholesale Businesses:
a. Infrastructure Finance: Improvement
in business disbursements (both on QoQ and YoY basis) was on account of
culmination of few large sanctions in identified focus areas of renewable and
roads, where the Company is one of the leading players.
b. Real Estate Finance (RE): Disbursements
continued towards completion of existing projects, in line with business
volumes. With continued focus on retailisation, as a part of its Lakshya 26 plan,
the Company will continue to work on a capital light model for its wholesale
businesses.
Collections:
Improvement in Collection Efficiencies
(CE), over Q3FY22, was led by the Company’s strengths in on-ground collections
and use of propensity-based data analytics to channelize resources.
Retail Businesses: The portfolio focus
continued towards boosting 0 DPD collections and managing early bucket
delinquencies.
a. Farm Equipment Finance: Achieved
all-time high regular CE at 94.4% in Mar-22 owing to concerted on-ground
collections, well above industry performance.
b. Micro Loans: Regular CE maintained
at 99.6% in Mar-22 through consistent on-ground efforts. Focus on increasing
adoption of QR-code based collections for enhancing ease of repayments. c.
Two-Wheeler Finance: Regular CE in Mar-22 at 98.8%, much better than industry
levels. Focus on reduction in bounce rates using concentrated call centre and
analytics driven resource allocation efforts.
d. Consumer Loans: Maintaining
superior than industry portfolio quality. Mar-22 regular CE at 99.7%
e. Home Loan / LAP: Regular CE
continued to be over 99.4% throughout the quarter owing to strong focus on
reducing bounces and call center retention to control roll forwards.
Wholesale Businesses:
a. Infrastructure Finance: Timely
repayments as well as pre-payments resulted in continued strong collections,
attesting to strong portfolio quality.
b. Real Estate Finance: Principal
repayment/ pre-payment in FY22 saw 62% uptick versus FY21 on back of continued
focus on project completion and rigorous monitoring. 13% YoY reduction in RE
portfolio majorly owing to principal repayment/ pre-payment of Rs 3201 crore in
past 12 months.
Liability
Management
During the quarter, the Company
continued to lock-in adequate long-term borrowings at lower interest rate with
the intent of remaining well-protected from expected liquidity tightening and
increase in interest rates in the coming quarters.
o Reduction in Yearly WAC to 7.50% in
FY22, lowest ever, down 58 bps YoY
o Raised low cost PSL loans of Rs 1818
crore in Q4FY22 and amongst the first NBFCs to raise money through
Sustainability Linked Loans
o As of March 2022, maintained Rs 11765
crore of liquid funds in the form of cash, FDs and other liquid investment
During FY22, the long-term ratings of
LTFH and all its lending subsidiaries have been reaffirmed at ‘AAA’ (Stable
Outlook) by all four credit rating agencies: CRISIL (March-22), CARE (Sep-21),
India Ratings (Apr-22) and ICRA (Aug-21 and Sep-21).
Balance
Sheet Strength
At the end of the quarter, GS3 in
absolute terms stood at Rs 3249 crore. In percentage terms, the GS3 and NS3
assets of the Company stood at 3.80% and 2.00% respectively with PCR on Stage 3
assets at 48%
In addition to PCR on GS3 assets, the
Company continues to carry additional provisions of Rs 1727 crore
(corresponding to 2.10% of standard assets). With the existing collection
momentum in OTR pool, the Company remains confident that current provisions
will be sufficient to counter any future stresses related to OTR accounts.
Overall capital adequacy was 22.9% (Tier 1: 19.7%) and D/E stood at 4.27 in
Q4FY22.
Asset
Mix
Retail assets contributed to 51% of
portfolio mix in Q4FY22 as against 43% in Q4FY21. The retail book saw a growth
of 6% QoQ and the Focused Book stood at Rs 86815 crore in Q4FY22. In the
Investment Management business, the overall average AUM stood at Rs 75592 crore
as of Q4FY22, up by 4% on YoY basis.
Financial
Performance FY2022
The
consolidated income from operations declined 11% to Rs 11704.17 crore for the year
ended March 2022, while other income of the company fell 4% to Rs 619.38 crore.
The total income dipped 10% to Rs 12323.55 crore for FY2022. Interest expenses plunged
20% to Rs 5753.79 crore. Operating expenses increased 21% to Rs 2160.98 crore.
The operating profits declined 7% at Rs 4408.78 crore. The cost-to-income ratio
rose to 32.9% in FY2022 from 27.3% in FY2021.
Depreciation
increased 20% to Rs 102.64 crore, while provisions fell 15% to Rs 3083.29 crore.
Profit before tax eased 3% yoy basis at Rs 1222.85 crore.
Effective
tax rate declined to 30.6% in FY2022 from 41.5% in FY2021. Net Profit of the
company, including profit from discontinued operation of Rs 200.01 crore, increased
10% to Rs 1070.11 crore for FY2022.
Notes:
Exceptional item during the
year ended March 2021 represents net gain of Rs 225.61 crore on the divestment
of entire stake in the subsidiary company. L&T Capital Markets Limited. The
transaction was concluded on 24 April 2020.
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L&T Finance
Holdings: Consolidated Results
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Particulars
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2203 (3)
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2103 (3)
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Var %
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2203 (12)
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2103 (12)
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Var %
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Income from operations
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2918.75
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3223.61
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-9
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11704.17
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13104.85
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-11
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Other Income
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148.41
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267.78
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-45
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619.38
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648.48
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-4
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Total Income
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3067.16
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3491.39
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-12
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12323.55
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13753.33
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-10
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Interest Expended
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1392.26
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1610.88
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-14
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5753.79
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7212.62
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-20
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Operating Expense
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575.65
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554.43
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4
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2160.98
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1783.62
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21
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Operating Profits
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1099.25
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1326.08
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-17
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4408.78
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4757.09
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-7
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Depreciation /
Amortization
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27.78
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21.97
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26
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102.64
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85.66
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20
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Provisions and
Write-offs
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652.36
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652.04
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0
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3083.29
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3635.70
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-15
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Profit before EO
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419.11
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652.07
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-36
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1222.85
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1035.73
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18
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Exceptional Item
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0
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0
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-
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0
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225.61
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-
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PBT after EO
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419.11
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652.07
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-36
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1222.85
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1261.34
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-3
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Tax Expense
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128.93
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442.39
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-71
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373.62
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523.11
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-29
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Net Profit for the
period
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290.18
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209.68
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38
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849.23
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738.23
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15
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Share in profit/(loss)
of associate company
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0.00
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0.00
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-
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0.00
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0.00
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-
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Profit attributable to
non-controlling interest
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-0.89
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-0.88
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1
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-20.87
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-22.06
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-5
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PAT
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291.07
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210.56
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38
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870.10
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760.29
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14
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P/L from discontinued
operations
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51.17
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56.29
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-9
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200.01
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210.65
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-5
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PAT after P/L from
discontinued operations
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342.24
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266.85
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28
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1070.11
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970.94
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10
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EPS* (Rs)
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4.7
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3.4
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3.5
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2.5
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Adj BV (Rs)
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72.6
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70.4
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72.6
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70.4
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* Annualized on
current equity of Rs 2474.04 crore EO and relevant tax. Face Value: Rs 10,
Figures in Rs crore
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PL: Profit to Loss,
LP: Loss to Profit
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Source: Capitaline
Corporate Database
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