L&T Finance Ltd. aims to restore its net interest margins and fees to the guided range of 10.5-11% in the first half of fiscal 2026, provided the microfinance market remains stable as it is currently, the company's Managing Director and Chief Executive Officer Sudipta Roy has said.
The company reported NIMs plus fees of 10.33% in the quarter ended Dec. 31, 2024, compared to 10.93% in the year-ago quarter. The company reported a 2% year-on-year and 10% sequential decline in its net profit at Rs 626 crore in the third quarter.
Talking to NDTV Profit, Roy said that the microfinance environment has seen some green shoots over the past 45 days and if this continues to happen, his company will get back to its normal growth trajectory.
“We are hopeful that if the current trajectory of stabilisation that has been visible for the last 45 days continues, then we probably can get to normal growth sometime in the latter part of Q1 or Q2 FY26,” he said.
Explaining the reason behind the muted Q3 results, the L&T Finance CEO said that the ‘pain' in this quarter has come from macro-related challenges that shot up the credit cost of the company.
“Our pain came from more of the macro-related disturbances like heatwaves and the floods. Some of those challenges continued through Q3 and the flows that we had seen emanating at the beginning of Q1 and Q2 started coming into the final provisioning states. So obviously that has given rise to a rising credit cost during this quarter,” he explained.
To prevent bad credit in this scenario, L&T Finance has tempered down its disbursements in the microfinance segment, which has impacted the NIMs and fee numbers of the company, Roy mentioned.
“We have tempered down some of our disbursements and taken the guardrails up, especially in the microfinance sector,” he said.
“The decision to temper down on microfinance business has had an impact on the overall and NIMs and fees because the composition of the disbursement and the book has slightly changed,” the CEO added.
Shares of L&T Finance were trading 0.12% higher at Rs 140.10 apiece as of 11:21 a.m., cooling off from a high of Rs 141.43. Meanwhile, the benchmark Nifty 50 was up 0.24% at 23,261.80 points.
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