Shares of L&T Finance Holdings Ltd. fell after the non-bank lender failed to meet earnings estimates in the quarter ended December.
Net profit fell by half over the year earlier to Rs 287.7 crore in the October-December period. That compares with the Rs 356.4-crore consensus estimate of analysts tracked by Bloomberg.
Its net interest income rose 2% year-on-year to Rs 1,779.6 crore, against the Rs 1,513.5-crore forecast.
L&T Finance, however, posted its highest quarterly disbursement since Q1FY20. Disbursements increased 51% sequentially, according to its investor presentation.
Disbursement trends (quarter-on-quarter)
- Farm disbursements rose 43% to Rs 1,554 crore.
- Two-wheeler disbursements rose 50% to Rs 1,652 crore.
- Farm and two-wheeler disbursements were the highest since FY17.
- Infrastructure disbursements were at the highest in nearly three years at Rs 4,641 crore.
- Rural disbursements were up 49%, and almost on par with levels of third quarter FY20. This came despite lower disbursements in micro loans as the company remains cautious till payment behaviour is normalised.
Asset Quality Trends
- L& Finance's gross stage-3 assets stood at 5.12% compared with 5.19% in the preceding quarter. But its net stage-3 assets rose to 1.92% from 1.67% in the July-September period.
- Collections during the quarter were at Rs 11,137 crore compared with Rs 10,296 crore in the previous three months, and Rs 4,321 crore during the April-June period.
“We continue to carry additional provisions of Rs 1,739 crore on the standard book as of Q3FY21,” the investor presentation said.
The company restructured assets worth Rs 213 crore during the quarter, against which 10% provisions are held. Also, the maximum potential restructuring, it said, will be 1.4% of the total book or Rs 1,438 crore.
“Easing of liquidity conditions enabling reduction in cost of borrowing, resilient balance sheet through additional provisions and strong pick-up in disbursements are expected to ensure responsible growth and protection from economic uncertainty,” the company said in its investor presentation.
L&T Finance will hold a board meeting later on Monday to discuss terms of the rights issue of up to Rs 3,000 crore. The board had approved raising the sum through the rights issue in November 2020.
Shares of L&T Finance fell as much as 5.6%—the most in a month—to Rs 99.4 apiece n early trade on Monday. The stock is down for the second session in a row.
Of the 15 analysts tracking the company, 10 recommend ‘buy', four have a ‘hold' rating and one suggests ‘sell'. The stock trades 9.1% higher than its Bloomberg consensus 12-month price target of Rs 95.7 apiece.
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