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L&T Finance Holdings has
recorded 47% jump in net profit to Rs 262.10 crore in the quarter ended June 2022
(Q1FY2023). PBT of the company increased 36% to Rs 306.78 crore.
The company has maintained strong
business momentum backed by digitization and leveraging power of data in
addition to inherent business strengths.
It has recorded highest-ever quarterly retail disbursements at Rs 8938 crore up
10% qoq and 148% yoy. Retail
portfolio mix at 54% is up
from 45% in Q1FY22. The retail book has expanded by 6% qoq and 19% yoy.
The collections
have normalized
with robust performance across businesses. The company has achieved highest-ever NIM + Fees of 8.23% in Q1FY23, up 71 bps YoY. The cost
of borrowings was at 7.27%, even in a phase of increasing interest rate regime.
GS3 was steady at 4.08% in Q1FY23 and NS3 improved to 1.87% and PCR to 55%. The company has adequate additional
provisions of Rs 1450 crore (1.73% of standard assets) over and above
GS3 and ECL provisions.
The company has strengthened balance
sheet with Capital adequacy ratio
of 23.12% (Tier 1: 19.98%).
Commenting on the
financial results Dinanath Dubhashi, Managing Director & CEO, L&T Finance
Holdings, said, “LTFH’s
results in Q1FY23, apart from highlighting our business strengths also reflects
our continuing focus on our stated strategy of accelerated retailisation.
Retail disbursements are at an all-time high. Our retail portfolio mix has
reached 54%, and our chosen `Right to Win` market leading products are on firm
ground owing to sustained focus on our business strengths as well as deep
integration of data analytics in the decision-making process, while disbursing,
servicing and collecting loans, across the customer life cycle. We have
disbursed at a monthly run rate of Rs 1300 crore in the Rural Business Loans
segment, while hitting new milestones in Consumer Loans and Home Loans.”
“Over the past five years, LTFH has
been able to attain market-leading positions in Rural Businesses by embedding
data and analytics-based business rule engines within our customer offerings,
which has served us well during the pandemic. The Company is now focused and is
confident of building the same value proposition for our urban businesses,
based on our strong digital and analytical abilities, allowing us to identify
and address customer needs across the customer lifecycle through our product
offerings.
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.
As we move forward on this path, the other four growth initiatives of
cross-sell and up-sell to our existing good customers, geo expansion, digital
and channel extension and launch of new products will play an increasingly
larger role. We are confident that, from here on, our sharp `customer first`
approach will be evident in all our initiatives."
Book value per
share of the company stood at Rs 81.6 per share at end June 2022. Adjusted book
value (net of NNPA and 10% of restructured loans) per share of the company
stood at Rs 74.2 per share at end June 2022.
Business
performance
A. Disbursements: In Q1FY23, retail
businesses witnessed robust disbursement momentum. Retail Finance saw the highest ever quarterly disbursement at
Rs 8938 crore, up 10% qoq and 148% yoy, with total disbursements in
the quarter for focused businesses reaching Rs 10500 crore. Retail book grew by
19% yoy, on the back of highest
ever disbursements.
Retail Businesses
a. Rural Business
Finance (erstwhile Micro Loans): The Rural Business Finance business, which enables
micro-entrepreneurship ecosystems at the grassroots level continued to witness
strong momentum in disbursements with monthly run rate reaching levels of Rs 1300 crore during the quarter (total
disbursements at Rs 3811 Cr), while the book grew by 27% yoy. The Company continues to deepen channel presence and
further geo-diversification will lead to future growth.
b. Farmer Finance
(erstwhile Farm Equipment Finance): The Farm Equipment Finance business showcased
robust performance with strong disbursements of Rs 1532 crore, up by 33% qoq and 13% yoy by focusing on preferred
dealer / OEM strategy, enhanced customer service and dominating counter share.
The Company maintained its market share while financing 33000 tractors in the quarter, which is the highest ever quarterly
disbursement, in terms of number of tractors financed.
c. Urban Finance:
Consumer Loans: LTFH continued to
grow its first ‘digital native’ Consumer Loans business, achieving
disbursements of Rs 1010 crore in
Q1FY23 (up 26% qoq). Additionally, the business continues to build a
significant scale by cross-selling to LTFH’s existing as well as to open market
customers.
Two-Wheeler Finance: The business saw the
highest Q1 disbursements in the quarter (Rs 1517 crore in Q1FY23, up 84% yoy), despite a market slowdown in
June. By maintaining a strong focus on customer value and building preferred
dealer / OEM relationships to grow market share, the business is delivering on
a strategy built around dominating counter share of preferred partners and
offering mutual value by leveraging the increased application of data analytics.
Retail Housing (Home
Loans & LAP): The
Retail Housing Finance business continued to deliver strongly quarter on
quarter performance, with disbursements at Rs 936 crore, led by a significant uptick from revamped offerings
and sourcing through select market channels. Additionally, the interest rate
regime has made offerings comparative to peers, which along with solid DSA
relationships is translating into enhanced business growth.
d. Small and Medium
Enterprise Loans (SME): In addition to existing products and to further accelerate
retailisation, LTFH undertook a pilot launch of SME loans in Q3FY22, with
end-to-end digital journey and use of analytics to deliver value-added
proposition for customers and channels. During the pilot, the business recorded
a steady uptick with disbursements of Rs
130 crore till Q1FY23 and is now ready for a scale up.
Wholesale Businesses
a. Infrastructure
Finance: During
the quarter, continuing with the stated strategy of the asset-light model, the
disbursements stood at Rs 1400 crore,
with focus on refinancing opportunities for operational projects in core sectors
– roads and renewable energy.
b. Real Estate
Finance (RE): This
quarter too, disbursements were only towards project completion, in line with Lakshya
2026 strategy.
B. Collections: LTFH witnessed
normalized collection efficiency (CE) in Q1FY23, across businesses, with retail
businesses reporting steady state pre-covid collection volumes. This was led by
the Company’s concerted on-field efforts, analytics led prioritization 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. Rural Business
Finance: Regular
CE maintained at ~99.6% in Q1FY23 (vs. 90% in Q1FY22) with continuous
improvement in On Due Date collections on account of consistent on-ground
efforts and management of early bucket delinquencies.
b. Farmer Finance: Crossed CD CE of 90%
in Q1FY23, despite the cyclical effect seen in this segment. Best ever April
and May CD CE with efforts concentrated around on-ground collections.
c. Urban Finance:
Two-Wheeler Finance: Maintained better
than industry regular CE at 98.7%, restricting flow forward in delinquent
bucket. Reduction in bounce rates owing to concentrated call centre / analytics
driven pre-delinquency management efforts.
Consumer Loans: Maintaining portfolio
performance with regular CE at ~ 99.2% during the quarter with focus on
arresting early delinquencies.
Home Loans/LAP: Regular CE continued
to be over 99% owing to strong focus on reducing bounces and call centre
retention to control roll forwards.
Wholesale Businesses:
Collections
in the wholesale portfolio continued as per plan, with yoy reduction in
wholesale book by Rs 5868 Cr
a. Infrastructure
Finance: Timely
repayments as well as pre-payments resulted in prepayment volumes of Rs1613
crore in Q1FY23 and reduction in the book by Rs 3304 crore on yoy basis. The focus
will be on maintaining strong position in renewables and roads, while
maintaining an asset light model.
b. Real Estate
Finance: The
Real Estate Finance book, in line with business objectives, registered a significant
reduction of Rs 2563 crore in the last 12 months, on the back of continued
focus on project completion and rigorous monitoring along with resolutions.
C. Liability
Management: With
the overall rise in market interest rates, the Company continued the policy of
locking-in adequate long-term borrowings at lower rates with the intent of
remaining well protected from expected liquidity tightening and potential rate
increase in interest rates in the coming quarters. Lowest ever quarterly WAC at
7.27%. Reduction by 37 bps yoy and 7 bps qoq. Raised incremental
long-term funding of Rs 1135 crore (of
which, PSL funding is Rs 635 Cr) in Q1FY23
D. Balance Sheet
Strength: At
the end of the quarter, GS3 in absolute terms stood at Rs 3559 crore. Reduction in overall GS3
to 4.08% in Q1FY23 on EAD basis
from 6.67% in Q1FY22 with NS3 at 1.87% and PCR at 55%. As a prudent measure, LTFH continues to carry additional
provisions of Rs 1450 crore (Macro,
enhanced and OTR provisions) corresponding to 1.73% of standard book in addition to GS3 provisions and ECL on standard
assets. This is to counter OTR-related impact in future (if any), on account of
Covid 2.0. 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 23.12% (Tier 1: 19.98%) and D/E stood
at 4.05x in Q1FY23.
E. Asset Mix: Retail assets
contributed to 54% of portfolio mix in Q1FY23 as against 45% in Q1FY22. The
retail book saw a growth of 19% yoy and
the Focused Book stood at Rs 87589 crore in Q1FY23. The 6% qoq
growth in retail book is well in line with the Company’s Lakshya 2026 target of
25% retail CAGR.
In the Investment Management business,
the overall average AUM stood at Rs 71571
crore as of Q1FY23, mirroring the fall in the broader market during the
quarter.
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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2206 (3)
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2106 (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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2946.59
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3008.30
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-2
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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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189.21
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107.41
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76
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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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3135.80
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3115.71
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1
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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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1413.20
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1509.53
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-6
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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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589.53
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498.58
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18
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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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1133.07
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1107.60
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2
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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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27.35
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22.59
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21
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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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798.94
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906.22
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-12
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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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306.78
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178.79
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72
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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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306.78
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178.79
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72
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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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85.13
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48.86
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74
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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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221.65
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129.93
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71
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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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-0.93
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-0.83
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12
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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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222.58
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130.76
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70
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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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39.52
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47.09
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-16
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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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262.10
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177.85
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47
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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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3.6
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2.1
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3.5
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2.5
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Adj BV (Rs)
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74.2
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70.0
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72.6
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70.4
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* Annualized on
current equity of Rs 2474.90 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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