The Company completed the merger of its operating lending entities - L&T Infrastructure Finance Company and L&T Housing Finance with L&T Finance to create a single unified entity for better operational efficiency, superior cash flow synergies and unparalleled growth.

The consolidated income from operations declined 2% to Rs 3223.61 crore for the quarter ended March 2021, while other income of the company jumped 147% to Rs 363.57 crore. The total income increased 5% to Rs 3587.18 crore for Q4FY2021.

Interest expenses declined 11% to Rs 1609.12 crore. Operating expenses were flat at Rs 645.47 crore, allowing the operating profits to improve 36% at Rs 1332.59 crore. The cost-to-income ratio declined to 32.6% in Q4FY2021 from 39.7% in Q4FY2020.

Depreciation rose 4% to Rs 22.33 crore, while provisions were flat at Rs 504.02 crore. Profit before tax surged 58% yoy basis at Rs 718.24 crore. There were exceptional expenses of Rs 88 crore. Effective tax rate increased to 52.8% in Q4FY2021 from 15.6% in Q4FY2020.

Net Profit of the company, after share in profit of associates and non-controlling interest and prior period adjustments, declined-31% to Rs 266.85 crore for Q4FY2020.

Book value per share of the company stood at Rs 76.0 per share at end March 2021. Adjusted book value (net of NNPA) per share of the company stood at Rs 70.4 per share at end March 2021.

Business performance

Loans and Advances declined 4% to Rs 94014 crore end March 2021 as compared to Rs 98384 crore at end March 2020. Loans & Advances in the focused businesses fell 2% to Rs 91312 crore end March 2021 compared with Rs 93154 crore end March 2020. In the de-emphasized portfolio, the loans & advances dipped 48% to Rs 2702 crore end March 2021.

The share of retail portfolio in the overall book grew to 43.4% in FY21. Within the book, Farm Equipment grew 22% on YoY basis and TW book by 8%. The asset size of Salaried home loans portfolio also grew by 6% in the same period.

The Average Assets under Management (AAUM) of the Investment Management business stood at Rs 72,728 crore in Q4FY21. The AUM for Equity and Fixed Income asset classes as on 31 March 2021, stood at Rs 40374 crore and Rs 23386 crore, with a growth of 4% and 4%, respectively, on a QoQ basis.

The quarter continued to see economic recovery across sectors led by rural and infrastructure space, which helped businesses. Rural franchise was strengthened with highest ever quarterly disbursements, with leadership positions in Farm & Two-Wheeler financing. Infra finance segment witnessed robust sell down momentum which touched Rs 979 crore in the quarter and NIMs + Fees increased to 8.17%, duly aided by lowest ever quarterly WAC at 7.65%.

In Q4FY21, the company continued to witness a strong pick up in disbursements, duly supported by robust sell down momentum in Infra finance and achieved highest ever quarterly disbursements in Rural finance.

The GS3 assets of the company stood at 4.97% in Q4FY21 of its book, showing a reduction of 39 bps YoY. NS3 registered the sharpest improvement since the introduction of Ind-AS and reduced from 2.28% to 1.57% YoY. The company also strengthened the PCR on Stage 3 assets from 59% in Q4FY20 to 69% in Q4FY21. Asset quality and PCR has improved in FY21 vis-à-vis FY20 despite the impact of Covid, showcasing strong underwriting, robust collection and stringent EWS As a prudent measure, LTFH is carrying additional provisions of Rs 1033 crore (1.2% of standard book) as of Q4FY21.

The Company now maintains a very strong capital adequacy of 23.80%.

Rural Finance:

a. Farm Equipment Finance: LTFH established itself as the No.1 financier in this segment with a significant increase in market share to 15%. Overall disbursements were up 17% YoY in FY21, achieved on the back of early normalization in CE. The disbursements for Q4 were up 40% on YoY basis. The Company leveraged analytics to gain counter share with identified dealers

b. Two-Wheeler Finance: With improved market share, we have been ranked 3rd in the segment with an 11% increase in market share. In Q4FY21, the business CE saw an uptick from Q3FY21, with disbursements in the quarter also up 14% YoY

c. Micro Loans (ML): With nearly NIL disbursements in Q1FY21 and moratorium till May, Micro Loans business registered its highest ever quarterly disbursement at Rs 3,181 crore in Q4FY21, up 54% QoQ and 44% YoY. Re-initiated disbursements to new customers in Q4 on the back of availability of customer repayment data.

Housing Finance:

a. Home Loan: In Q4FY21, the business continued to witness a steady pick up, with home loan disbursements registering a QoQ growth of ~35%. The salaried Home Loan segment registered a growth of 32% QoQ in Q4FY21 and 41% YoY

b. Real Estate: LTFH continued its strategy of focus on project completion by lending only to existing projects during the quarter. The Company plans to start new underwriting in FY22.

Infrastructure Finance:

LTFH continues to be the market leader in Renewable financing and one of the leading players in Infrastructure finance business with robust pipeline to aid disbursement growth in FY22. The business maintained a steady growth QoQ as situation improved. There was a strong uptick in sell-down and pre-payments, led by a strong sell-down desk and pick up in the sector. Strong emphasis was placed on project monitoring through continuous engagement with contractors and developers as well as use of technology like drones, etc.

Liquidity:

Q1FY21 saw tightened liquidity situation for NBFCs with pandemic led disruptions, moratorium and closure of few debt schemes by a Mutual Fund. LTFH proactively took necessary measures to remain resilient through the pandemic:

Q1FY21 - Proactively shored up liquidity to safeguard the company against lockdown and moratorium issues

Q2FY21 - With ease in systemic liquidity & reduction in uncertainty; gradually reduced negative carry and liquidity

Q3/Q4FY21- Demonstrated strength by raising low-cost funds as well as prepaying / renegotiating high-cost borrowing

Sharp decline in cost of funds with Q4FY21 WAC at 7.65% – down 78 bps on YoY basis & 17 bps on QoQ basis

As of March 2021, the company maintained liquid assets in the form of cash, FDs and other liquid investments to the tune of Rs 10,122 crore.

Highest credit Ratings

A diversified business presence, strategic importance to L&T, strong resource raising ability and adequate capitalization resulted LTFH and all its lending subsidiaries' long-term ratings been rated ‘AAA' by all four rating agencies:

Subsequent to the merger of L&T Infrastructure Finance Company and L&T Housing Finance into L&T Finance (L&T Finance) becoming effective, all the Rating agencies have reviewed the ratings of L&T Finance and have assigned / reaffirmed the ‘AAA' rating in April-21.

Financial Performance FY2021

The consolidated income from operations eased 1% to Rs 13104.85 crore for the nine-months ended March 2021, while other income of the company dipped 25% to Rs 975.25 crore. The total income declined 3% to Rs 14080.10 crore for FY2021.

Interest expenses fell 4% to Rs 7199.92 crore. Operating expenses increased 8% to Rs 2457.47 crore, causing the operating profits to decline 7% at Rs 4422.71 crore. The cost-to-income ratio was higher at 37.4% in FY2021 from 30.4% in FY2020.

Depreciation rose 7% to Rs 87.09 crore, while provisions jumped 49% to Rs 2978.03 crore. PBT before exceptional item declined 49% yoy basis at Rs 1357.59 crore.

There is exceptional income of Rs 137.61 crore. PBT after exceptional income dipped 44% yoy basis at Rs 1495.20 crore.

Effective tax rate declined to 30.1% in FY2021 from 36.6% in FY2020. Net Profit of the company, after share in profit of associates and non-controlling interest and prior period adjustments, declined 43% to Rs 970.94 crore for FY2020.

Note:

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.

One-time impact of tax for L&T IDF pertaining to earlier years (FY15, FY16 and FY17) of Rs 73 crore and Rs 88 crore related to Stamp duty expense on LTF merger cost in Q4FY2021.

One-time impact of tax for L&T IDF pertaining to earlier years (FY15, FY16 and FY17) of Rs 96 Cr and Rs 88 crore related to Stamp duty expense on LTF merger cost for FY2021.