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Motilal Oswal Report
L&T Finance Holdings Ltd. reported profit after tax of Rs 6.4 billion (inline) in Q3 FY24. Pre-provision operating profit grew ~7% YoY to Rs 13.4 billion (in line), while credit costs of ~Rs 5.1 billion translated into annualised credit costs of 2.5% (versus 2.6% in Q2 FY24 and 2.7% in Q3 FY24).
In 9M FY24, PAT grew ~58% YoY to Rs 17.7 billion.
L&T Finance Holdings' consolidated return on assset/return on equity rose 10 bp/55 bp QoQ to ~2.5%/~11.4% in Q3 FY24. Retail RoA also improved ~10 bp QoQ to ~3.4%.
Retail loans grew ~8% QoQ/31% YoY, propelled by healthy growth in mciro finance institution, home loans and two-wheeler. Personal loans exhibited a temporary blip in growth momentum but should resume the growth trajectory from Q4 FY24 onward.
Mr. Sudipta Roy (excluding ICICI Bank Ltd.) has succeeded Mr. Dinanath Dubhashi as MD and CEO. Mr. Roy will look to leverage his extensive experience to further strengthen the franchise.
We expect that the retail mix will improve to ~94-95% by March 2024 from 91% as of Dec-23. Considering the accelerated rundown in the wholesale book, we model consolidated loan growth of 18% and PAT compound annual growth rate of 34% over FY23- FY26E, with consolidated return on asset/return on equity of 2.7%/~15% in FY26E.
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