by Ankita Lodh on 21 January 2025, 3 minutes min read
L&T Finance Holdings’ latest quarterly results reveal a company effectively managing market challenges while advancing its retail transformation strategy.
The financial services giant reported mixed results in Q3 FY25, with several metrics exceeding expectations while others faced temporary pressure. The comprehensive performance indicates strong underlying fundamentals despite sector-wide challenges.
That being said, let’s take a closer look at the L&T Finance Q3 results.
The company posted a net profit of ₹626.4 crore, showing a modest decline of 2.1% from the previous year’s ₹640 crore. However, this performance significantly beat market estimates of ₹578.8 crore, highlighting the company’s operational strength.
Net Interest Income grew by 11.4% to ₹2,041 crore, supported by a robust 15.1% rise in interest income to ₹3,806.38 crore, demonstrating healthy core business growth despite market pressures.
Consolidated Results (₹ cr.) | Jun 2024 | Sep 2024 | Dec 2024 |
Operating Profit | 2,302 | 2,444 | 2,422 |
Profit before tax | 922 | 940 | 824 |
Net Profit | 685 | 697 | 626 |
Source: Screener
Asset quality metrics also showed notable improvement during the quarter, with the GNPA (Gross Non-Performing Asset) ratio dropping to 2.85% from 3.19% in the previous quarter. The NNPA (Net Non-Performing Asset) ratio also improved considerably, declining to 0.81% from 0.96%.
These improvements in asset quality metrics point to effective risk management strategies, particularly significant in today’s uncertain market conditions. The consistent improvement in these crucial metrics suggests sustainable risk management practices.
The quarter presented specific challenges that the company addressed proactively. Impairment costs more than doubled to ₹729 crore from ₹336.65 crore in Q3 FY24, reflecting ongoing pressures in the microfinance sector and margin challenges. While this significant increase in provisions impacted current profitability, it demonstrates a conservative approach to potential risks and long-term stability focus.
The loan book performance tells a compelling story of strong growth, expanding 16% year-on-year to reach ₹95,120 crore. Most impressively, the retail loan segment grew by 23% to ₹92,224 crore, showcasing successful execution of the company’s retail-focused strategy.
This substantial shift toward retail lending suggests a well-planned diversification of risk while targeting sustainable growth opportunities in the consumer segment.
Market reaction to the results showed a positive reaction to L&T Finance share price, with L&T Finance shares increasing to ₹146.00 as of January 21, 2025.
Source: Google Finance
Examining the broader picture reveals that L&T Finance has maintained solid performance over the first nine months of FY25, with consolidated PAT growing by 14% compared to the same period last year.
CEO Sudipta Roy’s commentary provided valuable insights into the company’s strategic direction, expressing confidence in managing current challenges in the microfinance sector while anticipating improved conditions in upcoming quarters.
“Despite certain macro challenges within the microfinance sector, we have managed the situation effectively. We are hopeful that the environment will be much better over the next couple of quarters.”
This balanced outlook, combined with the company’s strategic moves in retail lending, indicates a clear focus on building sustainable long-term value while managing near-term pressures.
The L&T Finance Q3 results have broader implications for the financial services sector. L&T Finance’s successful execution of its retail transformation while maintaining asset quality sets a benchmark for peers pursuing similar strategies.
The company’s approach to balancing growth with risk management offers insights into sustainable business practices in India’s evolving financial landscape.
For investors and market observers, L&T Finance results present a comprehensive picture of a company successfully managing its transformation while maintaining financial stability.
The strategic focus on retail lending, combined with risk management practices, positions L&T Finance favourably in the competitive landscape. While short-term challenges exist, particularly in the microfinance sector, the company’s strategic direction remains strong.
The coming quarters will be crucial in determining whether this momentum can be maintained in the current market scenario.
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