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L&T Finance Holdings has
recorded 12% increase in net profit to Rs 325.99 crore in the quarter ended December
2021 (Q3FY2022). PBT of the company increased 22% to Rs 420.48 crore.
The company has maintained healthy business
momentum backed by inherent business strengths, while also accelerated retailisation momentum. The company
has recorded all-time high retail quarterly disbursements of Rs 7600 crore,
showing growth of 29%.
Retail
portfolio mix improved to 50% end December 2021 up from 40% end December 2020 with retail
book rising 4% qoq.
Rural
business now the largest lending segment accounting for 38% of lending book,
has shown growth of 12% yoy.
The company
has launched new products to support future growth. It has continued to scale-up
of consumer Loan business with Rs 650 crore disbursement in Q3FY22. The Small and Medium Business Loans is launched in
Q3FY22 with end-to-end digital journey.
NIM+Fees is
healthy 8.10% in Q3FY22 showing
improvement from 7.58% in Q2FY22. The company has lowered cost of borrowings to 7.47%. The company has reduced
cost of funds by 35 bps yoy and its well protected from liquidity
tightening and increase in interest rates.
GS3 stood at 5.91% in Q3FY22 with PCR
at 50% and NS3 at 3.03%. The company has adequate additional provisions of Rs 1699 crore (2.19% of standard assets)
over and above these.
Capital
adequacy improved
to 24.1% (Tier 1: 20.3%). D/E ratio at 4.2 in Q3FY22.
Commenting
on the financial results Dinanath Dubhashi, Managing Director & CEO,
L&T Finance Holdings, said, “The financial results of this quarter, apart
from highlighting our business strengths, also underline a milestone
achievement for our retailisation journey. The period saw businesses returning
to pre-Covid levels despite industry degrowth during the festive season. In our
retail businesses of Farm and Two-Wheeler finance, we maintained business
momentum as a leading retail financier with a stable market share owing to our
digital & data analytics capabilities. Our Micro Loans business volumes
have normalized over Rs 1000 crore/ month and we continue to gain traction in Consumer
Loans and Home Loans.”
“We will continue to augment our
retail growth engine by leveraging an end-to-end digital platform and direct to
consumer journeys, while adding new businesses as well as cross sell and upsell
to “good credit’ customers. We believe that our drivers of growth -
retailisation, strong digital & analytical abilities, a customer focused
approach and a sustainable growth through ESG will position us in good stead
for enabling customer aspirations & fulfilling their financing needs.”
Quarterly
performance
The consolidated income from operations declined
13% to Rs 2874.37 crore for the quarter ended December 2021, while other income
of the company rose 10% to Rs 276.13 crore. The total income fell 11% to Rs 3150.50
crore for Q3FY2022.
Interest expenses declined 18% to Rs 1406.59 crore.
Operating expenses increased 3% to Rs 557.39 crore. The operating profits declined
8% at Rs 1186.52 crore. The cost-to-income ratio rose to 32.0% in Q3FY2022 from
29.5% in Q3FY2021. Depreciation increased 17% to Rs 24.28 crore, while
provisions fell 20% to Rs 741.76 crore. Profit before tax surged 22% yoy basis
at Rs 420.48 crore.
Effective tax rate increased to 26.8% in
Q3FY2022 from 16.4% in Q3FY2021. Net Profit of the company, after share in
profit of associates and non-controlling interest, improved 12% to Rs 325.99 crore
for Q3FY2021.
Book value per share of the company stood at Rs 79.3
per share at end December 2021. Adjusted book value (net of NNPA and 10% of
restructured loans) per share of the company stood at Rs 68.3 per share at end December
2021.
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 4% qoq, on the back of highest ever Q3 disbursements,
supported by strong growth in Two-Wheeler Finance, Micro Loans and Consumer
Loan businesses. Total disbursements in the quarter for focused retail
businesses stood at Rs 7606 crore, up 29% yoy.
To further accelerate retailisation
and support future growth, the Company has also undertaken a pilot launch of
Small & Medium business loans during the quarter, with end-to-end digital
journey and use of analytics to deliver value added proposition for customers
& channels.
Rural Finance: The portfolio became
the largest lending segment in LTFH, comprising 38% of lending book, surpassing
Wholesale for the first time this quarter. The business achieved highest ever
Q3 disbursements at Rs 6935 crore
Farm Equipment
Finance: The
Company showcased relatively strong performance, despite industry slowdown, by
working on preferred dealer / OEM strategy and maintained its market share.
Increased focus on lending to existing customers, which constituted 20% of
quarterly disbursements, also contributed to the performance.
Two-Wheeler Finance: Business strategy
built around dominating counter shares of preferred partners and increasing
application of data analytics helped deliver strong performance despite muted
festive season. LTFH is working towards increasing finance penetration by
working on additional products for financially prudent customers, which will
act as a growth driver in this segment.
Micro Loans: Healthy volumes in
disbursements during the quarter was driven by normalization of collections and
better than industry asset quality. Disbursements in the quarter stood at Rs 3157 crore, which are in line with
pre-Covid levels. The Company continues to deepen the channel presence and
further geo-diversification will lead to future growth.
Consumer Loans: LTFH’s first ‘digital
native’ business continued to witness strong traction with continued focus on
existing customers with disbursements of Rs 650 crore in Q3FY22. The business now plans to tap
non-captive customers, targeted towards responsible end-use ecosystem, to fuel
future growth.
Housing Finance:
Home Loan (HL) / LAP:
HL
business witnessed steady volumes in the salaried segment and disbursements to
SENP segment, with revamped offerings, were reinitiated in the quarter. The salaried
home loan book was up 12% yoy and 6% qoq.
Real Estate Finance
(RE): The
disbursement volumes were in line with business focus, clearly aimed at completion
of existing projects.
Infrastructure
Finance:
Q3FY22 disbursements were at Rs 1,758
crore, up 31% qoq. The business continues to focus on refinancing opportunities
for operational projects in core sectors –roads and renewable energy, where it
is one of the leading players.
Collections
Collection Efficiencies (CE), having
returned to pre-Covid level in the previous quarter, stabilized or further
improved in Q3FY22. This was led by strengths in on-ground collections and use
of propensity-based data analytics to channelize resources. Total Q3FY22
collections from focused book stood at Rs 13,037 crore
Rural Finance: The portfolio focus
continued towards boosting 0 DPD collections and managing early bucket
delinquencies.
Farm Equipment
Finance: Concerted
on-ground collection resulted in regular CE at 91.3%, well above industry
performance.
Two-Wheeler Finance: Maintained better
than industry regular CE at 98.3%, restricting flow forward in delinquent
bucket. Reduction in bounce rates was owing to concentrated call centre /
analytics driven pre-delinquency management efforts.
Micro Loans: Regular CE maintained
at 99.3% through consistent on-ground efforts & management of early bucket
delinquencies.
Consumer Loans: Maintaining superior
portfolio performance at 99.6% regular CE.
Housing Finance:
Home Loan / LAP: Regular CE stabilized
at 99.3% through centralized strategy & call center retention to control
roll forwards. Focused on increased resolution percentage in higher buckets.
Real Estate Finance: Principal repayment/
pre-payment in Q3FY22 saw 153% growth against quarterly average of FY21 on back
of continued focus on project completion and rigorous monitoring. Principal
repayment/ pre-payment of Rs 3,148 crore in past 12 months has led to reduction
in overall RE portfolio.
Infrastructure
Finance: Continued
to see strong collections in the portfolio through contracted repayments as
well pre-payments, attesting to strong portfolio quality.
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.
As of December 2021, maintained Rs 13,481
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
(May-21), CARE (Sep-21), India Ratings (Apr-21) & ICRA (Sep-21).
Balance Sheet
Strength: At
the end of the quarter, GS3 in absolute terms stood at Rs 4,866 crore remaining
almost stable on qoq basis. In percentage terms, the GS3 and NS3 assets of the
Company stood at 5.91% and 3.03% respectively with PCR on Stage 3 assets at
50%.
In addition to PCR on GS3 assets, the
Company continues to carry additional provisions of Rs 1,699 crore
(corresponding to 2.19% of standard assets). Minimal utilization of additional
provisions for retail business was undertaken in this quarter. With the robust
collection momentum in existing OTR pool, the Company remains confident that
existing provisions will be sufficient to counter any moratorium related stress
on account of OTR-related impact in future (if any), on account of Covid 2.0.
Overall capital adequacy improved to 24.1% (Tier 1: 20.3%) and D/E stood at 4.2
in Q3FY22.
The Company has entered into a
definitive agreement with HSBC Asset Management (India) Private Limited (“HSBC
AMC”) on December 23, 2021 to sell 100% equity shares of L&T Investment Management
Limited (“LTIM”), a wholly owned subsidiary of the Company, which is the
investment manager of L&T Mutual Fund, for an aggregate purchase
consideration of USD 425 million (subject to adjustments as set out in the
definitive agreement). In addition, the Company will also be entitled to surplus
cash balance left in LTIM in excess of regulatory and investment capital
requirements until the completion of the acquisition.
Cash, cash equivalents and liquid
investments in the books of LTIM as on December 31, 2021, is Rs 731 crore. The
said transaction is subject to the requisite regulatory approvals. Accordingly,
as required by Ind AS 105, LTIM has been presented in the aforesaid financial
results as “Non-Current Assets held for sale and discontinued operations”.
Asset Mix: Retail assets (Rural
+ Retail Housing) contributed to 50% of portfolio mix in Q3FY22 as against 40%
in Q3FY21. The Rural book saw a growth of 5% qoq and the Focused Book stood at Rs 83390 crore in Q3FY22.
In the Investment Management
business, the overall average AUM stood at Rs 77,095 crore as of Q3FY22. Pure
Equity & Hybrid mix for LTFH stands at 61% of the AUM as against 48% for
the industry.
Financial
Performance 9MFY2022
The consolidated income
from operations declined 11% to Rs 8785.42 crore for the nine-months ended
September 2021, while other income of the company jumped 16% to Rs 619.81 crore.
The total income fell 10% to Rs 9405.23 crore for 9MFY2022. Interest expenses dipped
22% to Rs 4361.53 crore. Operating expenses increased 29% to Rs 1585.33 crore, causing
the operating profits to decline 4% at Rs 3458.37 crore. The cost-to-income
ratio increased to 31.4% in 9MFY2022 from 25.5% in 9MFY2021. Depreciation jumped
18% to Rs 74.86 crore, while provisions fell 19% to Rs 2430.93 crore. Profit
before tax surged 25% yoy basis at Rs 952.58 crore. Effective tax rate
increased to 25.7% in 9MFY2022 from 10.6% in 9MFY2021. Net Profit of the
company, after share in profit of associates and non-controlling interest,
improved 3% to Rs 727.87 crore for 9MFY2021.
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.
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 Q3FY2022.
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L&T Finance
Holdings: Consolidated Results
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Particulars
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2112 (3)
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2012 (3)
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Var %
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2112 (9)
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2012 (9)
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Var %
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2103 (12)
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2003 (12)
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Var %
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Income from operations
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2874.37
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3304.44
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-13
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8785.42
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9881.24
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-11
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13104.85
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13244.74
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-1
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Other Income
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276.13
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250.77
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10
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619.81
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535.06
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16
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975.25
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1303.39
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-25
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Total Income
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3150.50
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3555.21
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-11
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9405.23
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10416.30
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-10
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14080.10
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14548.13
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-3
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Interest Expended
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1406.59
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1723.70
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-18
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4361.53
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5601.74
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-22
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7199.92
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7513.60
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-4
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Operating Expense
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557.39
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540.53
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3
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1585.33
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1229.19
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29
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1758.22
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1968.30
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-11
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Operating Profits
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1186.52
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1290.98
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-8
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3458.37
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3585.37
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-4
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5121.96
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5066.23
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1
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Depreciation /
Amortization
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24.28
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20.70
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17
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74.86
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63.69
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18
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87.09
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81.59
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7
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Provisions and
Write-offs
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741.76
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925.97
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-20
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2430.93
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2983.66
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-19
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3677.28
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2304.56
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60
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Profit before EO
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420.48
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344.31
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22
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952.58
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538.02
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77
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1357.59
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2680.08
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-49
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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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137.61
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0
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-
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PBT after EO
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420.48
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344.31
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22
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952.58
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763.63
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25
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1495.20
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2680.08
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-44
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Tax Expense
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112.60
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56.56
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99
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244.69
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80.72
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203
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450.32
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979.82
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-54
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Net Profit for the
period
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307.88
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287.75
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7
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707.89
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682.91
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4
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1044.88
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1700.26
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-39
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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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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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-18.11
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-2.91
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522
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-19.98
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-21.18
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-6
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-22.06
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0.09
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-LP
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PAT
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325.99
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290.66
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12
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727.87
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704.09
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3
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1066.94
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1700.17
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-37
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PPA
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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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-96.00
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0.00
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-
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PAT after PPA
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325.99
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290.66
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12
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727.87
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704.09
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3
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970.94
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1700.17
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-43
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EPS*
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5.3
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4.7
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3.9
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2.7
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3.5
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6.9
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* Annualized on
current equity of Rs 2473.90 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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