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L&T Finance Holdings has
recorded 15% decline in net profit to Rs 224.03 crore in the quarter ended
September 2021 (Q2FY2022). The company
has witnessed normalisation across collections and disbursements. The
retail disbursements increased 55% QoQ
with highest ever Q2 disbursement in rural finance. Rural Finance business
collections at Rs 5431 crore were similar
to Q3FY21 and Q4FY21. Collection efficiencies normalized to pre-Covid levels.
The company has adequately addressed
Covid 2.0 related risks through additional provisions and OTR provisions of Rs 1747 crore (2.22% of standard book).
The company
has exhibited traction in its ‘Digital Native’ Consumer Loans business with
disbursements of Rs 479 crore in Q2FY2021.
The company
has maintained
adequate liquidity buffers as a
prudent measure with liquid assets of Rs
13122 crore.
The company continued delivery on business strategies with an increase in
retailisation: Rural + Retail + Housing Book accounted 47% of the total book. Achieved NIM+Fees has improved to 7.58% in Q2FY22 from 7.52% in Q1FY22. The company has
reduced cost of funds by 11 bps qoq to 7.53%.
Gross stage 3 asset stood at t 5.74% and net stage 3 assets at 2.81% with PCR at 52%..
D/E ratio stands at 4.40x, while the capital adequacy ratio improved
to 25.16% (Tier 1: 20.06%). ICRA
revised long-term ratings outlook of LTFH to AAA ‘Stable’
Commenting
on the financial results Dinanath Dubhashi, Managing Director & CEO,
L&T Finance Holdings, said, “Covid 2.0 as well as skewed monsoon and other
macro-economic factors have had an impact on the business environment in Q2.
Despite this, LTFH’s Rural Finance business had its best-ever Q2 disbursement
and witnessed normalisation in collections and disbursements. The Company’s
ability to successfully deliver on business metrics this quarter as well as
throughout the Covid quarters is an important validation of its sound digital
and data analytics strategy.”
“LTFH’s strong track record of
consistent improvement in collections and disbursements throughout the Covid
quarters, is reflected in its Q2FY22 performance. Disbursement momentum will
continue to further pick-up, backed by the Company’s established ability to
scale up product offerings in retail by harnessing our digital and analytics
strengths. LTFH is well provisioned for any short-term Covid 2.0 led
disruptions and remains steadfast in continuing to be of service to its
customers, helping finance their livelihoods and aspirations.”
Quarterly
performance
The consolidated income from
operations declined 12% to Rs 2902.82 crore for the quarter ended September
2021, while other income of the company rose 2% to Rs 231.64 crore. The total
income declined 11% to Rs 3134.46 crore for Q2FY2022.
Interest expenses dipped 24% to Rs
1441.70 crore. Operating expenses increased 30% to Rs 562.14 crore, leading to
5% decline in the operating profits to Rs 1130.62 crore. The cost-to-income
ratio rose to 33.2% in Q2FY2022 from 26.7% in Q2FY2021.
Depreciation increased 13% to Rs 28.35
crore, while provisions fell 6% to Rs 782.95 crore. Profit before tax
declined-3% yoy basis at Rs 319.32 crore.
Effective tax rate increased to 30.2%
in Q2FY2022 from 24.7% in Q2FY2021. Net Profit of the company, after share in
profit of associates and non-controlling interest, declined 15% to Rs 224.03
crore for Q2FY2021.
Book value per share of the company stood at Rs 77.7
per share at end September 2021. Adjusted book value (net of NNPA and 10% of
restructured loans) per share of the company stood at Rs 67.3 per share at end September
2021.
Business
performance
A. Disbursement: In Q2FY22, all LTFH
businesses witnessed robust disbursement momentum. Rural Finance business saw
the highest ever Q2 disbursement at Rs
4987 crore, up 51% QoQ.
The total disbursements in the quarter stood at Rs 7339 crore for the focused businesses.
Rural Finance: The business achieved
highest Q2 disbursements on back of faster recovery. Disbursements in the Micro
Loans business normalised in September.
a. Farm Equipment Finance: While
the Industry de-grew by 11% YoY, LTFH achieved its highest ever Q2
disbursements and maintained market share QoQ with continued focus on
refinance, which contributed ~28% to total farm disbursements.
b. Two-Wheeler Finance: In
Q2FY22, the business maintained its market share and achieved highest ever Q2
disbursements with a 51% QoQ growth through extensive use of analytics to
increase counter share with top dealers.
c. Micro Loans: Continuing with
the normalisation, Micro Loans disbursements rose to Rs 918 crore in Sep-2021.The focus remained on repeat customers,
geographies with improved CE as well as tapping newer geographies. The company
launched its Micro Loans business in Rajasthan this quarter.
d. Consumer Loans: The
business, which is LTFH’s first ‘digital native’ business, maintained its focus
on existing customers and rapidly scaled-up with disbursements of Rs 479 crore in Q2 on the back of smart
analytics-based sourcing.
Housing Finance:
a. Home Loan/LAP: The Home Loan
business saw steady disbursements and continued to maintain focus on the
salaried segment. The salaried home loan book was up 7% QoQ.
b. Real Estate Finance: In the
quarter, the Real Estate Finance business continued to focus on tranche
disbursements with priority towards projects at an advanced stage of
construction and disbursements in new proposals undertaken only for pre-approved
top developers.
Infrastructure
Finance: In
Q2FY22, disbursements were at Rs 1347
crore, with continued focus on refinancing of operational solar projects
and funding of greenfield projects. Project level collections have normalised,
and the business saw concerted efforts on retaining assets on book by
containing prepayments.
B. Collections: Collections
normalised across businesses in Q2FY22, led by smart data analytics, concerted
field efforts and gradual unlocking of the economy. Collection Efficiency reached
pre-Covid levels across products.
• Retail: Regular collection
efficiencies in Farm have stabilized at ~90% & in Two wheelers at 98% for
Q2FY22. Regular collection efficiencies for Micro Loans have surpassed 99%
levels with increased resolutions in higher buckets as well.
• Wholesale: Furthermore,
escrow collections in Real Estate portfolio during Q2 normalised, up 18% QoQ,
and are in line with Q3FY21 & Q4FY21. In Infra, no impact was seen on
operational projects in NHAI annuity, Transmission & Renewables sector.
Collections from Toll road portfolio were also at 112% of pre-covid levels
during the quarter.
C.
Liability Management: Liquidity continued to remain comfortable in
Q2FY22, with a well-diversified liability profile, which demonstrates astute
treasury management to diversify funding sources at a lower cost of borrowing.
The focus on raising low-cost incremental long-term borrowings continued in
Q2FY22.
• Reduction in quarterly
WAC by 11 bps QoQ and 79 bps YoY to 7.53%; lowest ever cost of borrowing
• Raised Rs 5030 crore of long-term borrowing in
Q2 at a WAC of sub 6%, including
Rs 2195 crore from PSL funding
• Higher NIMs at 7.58% achieved
YoY through higher retailisation, reduction in cost of borrowing and
maintaining lower average liquidity
• As of September 2021,
the Company maintained liquid assets in the form of cash, FDs and other liquid
investments to the tune of Rs 13122
crore.
D.
Highest Credit Ratings: During FY22, LTFH and all its lending
subsidiaries long-term ratings have been reaffirmed ‘AAA’ (Stable Outlook) by
all four rating agencies. Additionally, ICRA revised the outlook on the
long-term ratings of LTFH and L&T Finance Ltd, to ‘Stable’ from ‘Negative’. The revision in outlook was on account of
improved capitalisation and increased granularity in loan portfolio, given the
focus on retailisation.
E. Focus
on Strengthening Balance Sheet: From FY19 and all through the
Covid quarters, LTFH built macro-prudential provisions for unanticipated future
events which has held the Company in good stead. Continuing this focus, in
Q2FY22, LTFH is prudently carrying additional provisions and OTR provisions of
Rs 1747 crore (2.22% of standard
book). These provisions are over and above ECL on GS3 assets and normal ECL on
standard assets. The GS3 in absolute terms stood at Rs 4796 crore in Q2FY22, remaining almost stable on QoQ basis. In
percentage terms, the GS3 and NS3 assets of the Company stood at 5.74% and 2.81% respectively with PCR
on Stage 3 assets at 52%. Overall
capital adequacy improved to 25.16% (Tier
1: 20.06%) and D/E stood at 4.40 in Q2FY22.
F. Focused Lending
Book:
In Q2FY22, the Rural book saw a growth of 3% QoQ, supported by growth in
Farm Equipment Finance. The share of retail portfolio in the overall book grew
to 47% in Q2FY22. In
Infrastructure Finance there was a book de-growth on account of lower
disbursements and higher selldown / prepayments. The Focused Book stood at Rs 84466 crore in Q2FY22.
In the Investment Management business
overall AUM crossed Rs 80000 crore in Sep-21, increasing 5% QoQ on account of higher inflows.
Pure Equity & Hybrid mix for LTFH stands at 59% of the AUM as against 47%
for the industry.
Increase in
retailisation:
Rural + Retail Housing Book share grew to 47% in Q2FY22 from 26% and 41%
in FY16 and Q2FY21 respectively.
Financial Performance H1FY2022
The consolidated income from
operations declined 10% to Rs 5911.12 crore for the half year ended September
2021, while other income of the company jumped 29% to Rs 424.83 crore. The
total income declined 8% to Rs 6335.95 crore for H1FY2022.
Interest expenses dipped 24% to Rs
2950.56 crore. Operating expenses increased 31% to Rs 1087.70 crore, allowing
the operating profits to improve 4% at Rs 2297.69 crore. The cost-to-income
ratio rose to 32.1% in H1FY2022 from 27.4% in H1FY2021.
Depreciation moved up 17% to Rs 51.32
crore, while provisions fell 14% to Rs 1689.17 crore. Profit before tax surged
30% yoy basis at Rs 557.20 crore. There is no exceptional income in H1FY2022.
Effective tax rate increased to 28.2%
in H1FY2022 from 7.7% in H1FY2021. Net Profit of the company, after share in
profit of associates and non-controlling interest, fell-3% to Rs 401.88 crore
for H1FY2021.
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 Q2FY2022.
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L&T Finance
Holdings: Consolidated Results
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Particulars
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2109 (3)
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2009 (3)
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Var %
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2109 (6)
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2009 (6)
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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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2902.82
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3281.56
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-12
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5911.12
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6576.80
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-10
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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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231.64
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227.35
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2
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424.83
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329.64
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29
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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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3134.46
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3508.91
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-11
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6335.95
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6906.44
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-8
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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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1441.70
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1888.78
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-24
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2950.56
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3866.98
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-24
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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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562.14
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433.14
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30
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1087.70
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832.03
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31
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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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1130.62
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1186.99
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-5
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2297.69
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2207.43
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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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28.35
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25.16
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13
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51.32
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43.75
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17
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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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782.95
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832.80
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-6
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1689.17
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1961.00
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-14
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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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319.32
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329.03
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-3
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557.2
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202.68
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175
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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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319.32
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329.03
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-3
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557.20
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428.29
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30
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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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96.33
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81.31
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18
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157.19
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33.13
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374
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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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222.99
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247.72
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-10
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400.01
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395.16
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1
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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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-1.04
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-17.40
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-94
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-1.87
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-18.27
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-90
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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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224.03
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265.12
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-15
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401.88
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413.43
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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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224.03
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265.12
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-15
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401.88
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413.43
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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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3.6
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4.3
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3.3
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1.7
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3.5
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6.9
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* Annualized on
current equity of Rs 2472.89 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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