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L&T Finance Holdings has
recorded sharp 81% jump in net profit to Rs 404.63 crore in the quarter ended
September 2022 (Q2FY2023). The consolidated income from operations increased 6%
to Rs 3086.19 crore for the quarter ended September 2022, while other income of
the company jumped 23% to Rs 171.17 crore. The total income increased 7% to Rs
3257.36 crore for Q2FY2023. Interest expenses increased 0% to Rs 1438.46 crore.
Operating expenses increased
25% to Rs 659.73 crore, allowing the operating profits to improve 9% at Rs
1159.17 crore. The cost-to-income ratio was steady at 36.3% in Q2FY2023 from
33.2% in Q2FY2022. Depreciation declined 3% to Rs 27.09 crore, while provisions
fell 26% to Rs 576.53 crore.
Profit before tax surged
117% yoy basis at Rs 555.55 crore. Effective tax rate increased to 35.1% in
Q2FY2023 from 32.5% in Q2FY2022. Net Profit of the company, after share in
profit of associates and non-controlling interest, improved 81% to Rs 406.43
crore for Q2FY2022.
The company has accelerated
retailisation momentum and maintained strong business growth. It recorded
highest ever quarterly retail disbursements of Rs 10238 crore with retail book
crossing Rs 50000 crore milestone. The share of retail portfolio mix jumped to
58% up from 47% in Q2FY22.
NIM + Fees at 8.43% in Q2FY23 was up
85 bps yoy. The cost of funds at 7.33%, was down by 20 bps yoy, even in a phase
of increasing interest rate regime. GS3 reduced to 4.02% and NS3 eased to 1.85%
with PCR of 55%
The company has adequate additional
provisions of Rs 1096 crore (1.28% of standard assets) over and above GS3 and
ECL provisions. Capital adequacy stood at 22.65% with Tier 1 of 19.85%.
Commenting on the financial results
Dinanath Dubhashi, Managing Director & CEO, L&T Finance Holdings, said,
“LTFH’s results in Q2FY23 showcase our steadfast commitment towards accelerated
retailisation, in line with our strategic plan Lakshya 2026. Retail
disbursements are at an all time high, even surpassing the highest ever retail
disbursements registered last quarter. Our retail portfolio mix has reached
58%, up from 47% in Q2FY22, aided by the steady growth witnessed across
business segments. Driven by data analytics-led business rule engines, we saw
robust disbursements in our chosen ‘Right to Win’ market leading retail
products, with two of them registering highest ever disbursements during the
quarter, namely Rural Business Finance and Two-Wheeler Finance. Our sustained
focus on our business strengths as well as deep integration of data analytics
in the decisionmaking process across the customer lifecycle helped us hit new
milestones in our Home Loan segment while scaling up Consumer and SME Loans”
Book value per
share of the company stood at Rs 82.5 per share at end September 2022. Adjusted
book value (net of NNPA and 10% of restructured loans) per share of the company
stood at Rs 75.3 per share at end September 2022.
Business
performance
Disbursements
In Q2FY23, retail businesses continued
to witness a robust disbursement momentum with highest ever quarterly
disbursements at Rs.10238 crore, up 15% qoq and 84% yoy. Retail Finance book
grew by 27% yoy, on the back of highest ever quarterly disbursements,
surpassing Q1FY23 levels
Retail Businesses
a. Rural Business Finance (including
erstwhile Micro Loans): This business, which enables sustainable livelihoods at
the grassroot level continued its trend of strong business momentum in
disbursements and recorded the highest ever quarterly disbursements of Rs 4418
crore during the quarter, with the book growing by 40% yoy. The Company
continued its expansion into newer geographies and deepening its presence in
existing markets. Going forward the Company expects to sustain the momentum by
further launching new products under the business segment, in line with the
Lakshya 2026 strategy
b. Farmer Finance: The business
showcased steady performance with disbursements of Rs 1304 crore, up by 14%
yoy, by focusing on preferred dealer / OEM strategy, enhanced customer service,
improved customer retention and dominating counter share. The Company is
focused on increasing volumes and gaining market share with higher
contributions from the existing borrower segment
c. Urban Finance:
Consumer Loans: LTFH continued to grow
its first ‘digital native’ Consumer Loans business, achieving a monthly
run-rate of over Rs 400+ crore during the quarter (total disbursements of Rs
1328 crore in Q2FY23, up 32% qoq). The Company increased its customer funnel
through new channels namely, new partnerships with e-aggregators and insta
loans offerings to potential customers. Additionally, the business continues to
build a significant scale by crossselling to LTFH’s existing as well as to open
market customers.
Two-Wheeler Finance: The business saw
the highest ever quarterly disbursements at Rs 1721 crore, up 38% yoy. The market
share increased in the quarter led by the Sabse Khas loan and Income proof loan
offerings along with continued focus on deepening geo-presence. 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 segment witnessed an excellent growth
momentum with disbursements reaching Rs 1118 crore, up 19% qoq. The company
remain focused on enhancing disbursement volumes through strategic measures
like deepening geographic presence, solid DSA partnerships & increasing
customer retention through pro-active & improved service proposition
. Small and Medium Enterprise Loans
(SME): latest offering, whose pilot was launched in Q3FY22 witnessed a steady
uptick in Q2FY23 with quarterly disbursements crossing Rs 200 crore and the
portfolio size reaching Rs 321 crore, led by significant geographical and
channel expansion. This segment, with the use of analytics will deliver value-added
proposition for customers and channels while contributing towards accelerated
retailisation of the loan portfolio
Wholesale Businesses
a. Infrastructure Finance: During the
quarter, the business continued with its stated asset-light model strategy,
albeit with a reduced capital allocation and focused primarily on tranche
disbursements
b. Real Estate Finance (RE): In line
with Lakshya strategy, no new sanctions were made during the quarter and focus
remained only on project completion.
Collections
LTFH witnessed best in class
collections in Q2FY23, across retail businesses, led by the Company’s concerted
on-field efforts, analytics led prioritization and use of propensity-based data
analytics to channelize resources. Total collections across Retail Businesses
stood at Rs 7587 crore in Q2FY23, up 17% yoy
Retail Businesses: The portfolio focus
continued towards boosting 0 DPD collections and managing early bucket
delinquencies
a. Rural Business Finance: Regular CE
maintained at 99.7% in Q2FY23 with continuous improvement in On Due Date
collections on account of consistent on-ground efforts and management of early
bucket delinquencies
b. Farmer Finance: Best ever Q2 CDCE,
achieving more than 91% on month-on-month basis, despite the cyclical effect
seen in this segment
c. Urban Finance:
Two-Wheeler Finance: Collection
efficiency maintained at 99% through focus on digital collections, enhanced
resolutions through call center and on-field resources
Consumer Loans: Maintaining portfolio
performance with regular CE at 99%, with focus on arresting early delinquencies
Home Loans/LAP: Collection performance
continued to be over 99% through strengthened on-field support and use of data
analytics
Wholesale Businesses: Collections in
the wholesale portfolio continued as per plan, with yoy reduction in wholesale
book by Rs 5935 crore. Higher Real Estate collections were registered during
the quarter on account of increase in project monitoring and resolutions
(Principal repayment / prepayments of Rs 852 crore)
Fintech
Scale
In line with the strategic plan
Lakshya 2026 unveiled in FY22, LTFH continued on its path to becoming a
‘customer’ focused company from a ‘product’ focused one. During the quarter,
the Company continued to emphasize on customer facing applications, with a
clear focus on expanding the existing channels and ecosystems, and creating
newer channels.
Liability
Management
With the change in interest rate
trajectory through successive rate hikes in overall market interest rates in
FY23 so far, the Company continued its approach of locking-in adequate medium
to long-term borrowings which helped us control the impact of successive policy
rate hikes on cost of borrowing in Q2FY23
Quarterly cost of funds at 7.33%, up
by 6bps qoq, though lower by 20bps yoy
Continued to tap long term funds at
attractive rates. Raised long term funding of Rs 8256 crore in Q2FY23 vs.
Rs.1135 crore in Q1FY23 and Rs 5030 crore in Q2FY22
NIM + Fees up at 8.43 % (up 85 bps
yoy), on back of highest quarterly retail disbursements LTFH and all its
lending subsidiaries have long-term ratings of ‘AAA’ (Stable Outlook) by all
four credit rating agencies: LTFH and LTF rated by CRISIL (latest reviewed in
Sep-22), CARE (Sep-22), ICRA (Aug-22) and India Ratings (Apr-22). LTICL rated
by CRISIL (Sep-22), CARE (Sep-22) and ICRA (Aug- 22).
Balance
Sheet Strength
GS3 in absolute terms stood at Rs 3591
crore with overall GS3 reducing yoy to 4.02% in Q2FY23 on EAD basis from 6.48%
in Q2FY22 with NS3 at 1.85% and PCR at 55% F. Asset
Mix: Retail assets contributed to 58% of the portfolio mix in Q2FY23 as against
47% in Q2FY22. The retail book saw a growth of 27% yoy and the Total Book stood
at Rs 90098 crore in Q2FY23.
In the Investment Management business,
the overall average AUM for Q2FY23 stood at Rs 71703 crore.
Unlocking
value from the Mutual Fund Divestment
The Company received no objection from
SEBI to divest its Mutual Fund Business in the month of October : The
divestment of Mutual Fund business is in line with the strategic objective of
LTFH of unlocking value from its subsidiaries to strengthen its balance sheet
Financial
Performance H1FY2023
The consolidated income from
operations increased 2% to Rs 6032.78 crore for the half year ended September
2022 (H1FY2023), while other income of the company jumped 46% to Rs 360.38
crore. The total income increased 4% to Rs 6393.16 crore for H1FY2023. Interest
expenses declined 3% to Rs 2851.66 crore. Operating expenses increased 24% to
Rs 1249.26 crore, allowing the operating profits to improve 4% at Rs 2292.24 crore.
The cost-to-income ratio was higher at 35.3% in H1FY2023 from 31.4% in
H1FY2022.
Depreciation rose 6% to Rs
54.44 crore, while provisions declined 19% to Rs 1375.47 crore. Profit before
tax surged 88% yoy basis at Rs 862.33 crore. Effective tax rate eased to 32.5%
in H1FY2023 from 34.2% in H1FY2022. Net Profit of the company, after share in
profit of associates and non-controlling interest, improved 66% to Rs 668.53
crore for H1FY2022.
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L&T Finance
Holdings: Consolidated Results
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Particulars
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2209 (3)
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2109 (3)
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Var %
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2209 (6)
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2109 (6)
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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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3086.19
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2902.79
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6
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6032.78
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5911.05
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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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171.17
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138.77
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23
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360.38
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246.22
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46
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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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3257.36
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3041.56
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7
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6393.16
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6157.27
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4
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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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1438.46
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1445.41
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0
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2851.66
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2950.56
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-3
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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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659.73
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529.36
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25
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1249.26
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1006.48
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24
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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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1159.17
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1066.79
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9
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2292.24
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2200.23
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4
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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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27.09
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27.99
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-3
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54.44
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51.32
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6
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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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576.53
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782.95
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-26
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1375.47
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1689.17
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-19
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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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555.55
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255.85
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117
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862.33
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459.74
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88
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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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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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555.55
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255.85
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117
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862.33
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459.74
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88
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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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195.24
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83.23
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135
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280.37
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157.19
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78
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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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360.31
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172.62
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109
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581.96
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302.55
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92
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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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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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-0.86
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-1.04
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-17
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-1.79
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-1.87
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-4
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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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361.17
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173.66
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108
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583.75
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304.42
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92
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870.10
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760.29
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14
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PPA
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45.26
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50.37
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-10
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84.78
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97.46
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-13
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200.01
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210.65
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-5
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PAT after PPA
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406.43
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224.03
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81
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668.53
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401.88
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66
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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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5.8
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2.8
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4.7
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2.5
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3.5
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2.5
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Adj BV (Rs)
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75.3
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67.3
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75.3
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67.3
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72.6
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70.4
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* Annualized on
current equity of Rs 2476.02 crore EO and relevant tax. Face Value: Rs 10,
Figures in Rs crore
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Source: Capitaline
Corporate Database
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