L&T Finance Q1 Results Review — Motilal Oswal Retains 'Buy' Rating Post Healthy Earnings

L&T Finance has invested in process automation, security, and customer journeys. This, along with large partnerships in products like personal loan, should lead to stronger and more sustainable retail loan growth.

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Motilal Oswal Report

L&T Finance Ltd.’s Q1 FY26 earnings were in line with our expectations. Disbursements and loan growth remained modest, reflecting the company’s strategic focus on calibrated risk-based expansion.

Notably, asset quality remained largely stable despite Q1 FY26 being a seasonally weak quarter, which is a key positive. Additionally, the company benefited from a decline in borrowing costs, driven by policy rate cuts, which supported a modest expansion in NIMs.

L&T Finance has invested in process automation, security, and customer journeys. This, along with large partnerships in products like personal loan, should lead to stronger and more sustainable retail loan growth.

We expect the broad-based improvement in collection efficiency across product segments to sustain over the next two quarters, which should translate into stronger profitability for the company.

We estimate a PAT CAGR of 25% over FY25-27E, with consolidated RoA/RoE of 2.7%/~14% in FY27.

We reiterate our Buy rating on the stock with a target price of Rs 250 (based on 2x Mar’27E book value per share).

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