Highlights:

The company has witnessed strong quarter with new heights in Q3FY2023. The company is progressing well on journey towards Lakshya 2026 to become a top class, digitally-enabled, customer-focused, retail finance company.

The focus continued on accelerated retailisation, with the retail portfolio mix reaching 64%.

On the strategic initiatives front, the company has recently concluded the sale of mutual fund business

The retailisation journey has two major pillars - strong retail growth and accelerated sell-down of wholesale portfolio. The company has also created adequate provisions to support the accelerated sell-down process.

With a view to further strengthen the fintech franchise, the company continued to emphasize on digitisation, data analytics and customer-facing applications.

After divestment of the mutual fund business, the company has proposed merger of its subsidiary lending entities - L&T Finance and L&T Infra Credit with itself. This will result in a simple, unified structure.

The retail loan book of the company has increased 34% yoy and 10% qoq to Rs 57000 crore with retail mix rising to 64%.

The retail disbursement jumped 53% to all time high of Rs 11607 crore in Q3FY23.

The company has continued to show improvement in asset quality. The retail gross stage 3 asset declined to 3.47% and net stage 3 assets dipped to 0.73% end December 2022. The retail PCR has been strong at 79%.

The share of retail PAT has increased to 87% with robust retail RoA of 2.6% and retail RoE of 14.9%.

The retail RoA is well trending toward target of 3.0% for FY26 and company expects to achieve target earlier.

The retail NIM stood at 11.4%, while the company expects to maintain retail NIM above 11%

The retail Opex + credit cost is targeted to be maintained at 7%. This gives pre tax RoA of 4% and post tax RoA of 3%.

CAGR of retail book will be at least 25% under Lakshya 2026 strategy and expects to exceed target with onground capabilities and product launches.

The company expects to raise the share of retail loan book to 90% by April 2024.

The yield on microfinance loans stands at 24% and entire policy rate hike has been passed on to the customers.

The wholesale book has dipped to Rs 31010 crore end December 2022 from Rs 37597 crore a quarter ago and Rs 40788 crore a year ago. The company plans to reduce wholesale book through sell-downs, repayments and prepayments.

The company received total consideration amounting to Rs 4249 crore for sale of mutual fund business to HSBC, which includes Rs 3485 crore and surplus cash of Rs 764 crore from L&T Investment Management. The capital gains realized from sale amounts to Rs 2160 crore post tax.

The company commenced accelerated reduction of wholesale book during the quarter through a combination of various means like repayments, prepayments, sell down of loans to FIs / ARCs. In order to facilitate accelerated sell down of the wholesale book, one-time provision of Rs 2687 crore due to change in business model were created during the quarter.