- 21 Oct 2024
- ICICI Securities
L&T FINANCE REPORTED MIXED PERFORMANCE IN Q2FY25
News: L&T Finance reported mixed performance in Q2FY25. While advance growth remained steady, signs of stress accretion seem to be visible. Disbursement in retail segment remained at 12% YoY, resulting in 28% YoY and 5% QoQ growth in AUM at ₹88,975 crore. Urban finance (8% QoQ) and SME finance (16% QoQ0 remain in focus while de-growth in disbursement seen in rural (3% QoQ) and farmer finance (2% QoQ). Margins witnessed a 37 bps QoQ decline at 8.94%, which could be attributable to change in asset mix. Opex growth remain steady (11% YoY), though credit cost inched up sequentially from 2.37% to 2.59%. Earnings grew 17% YoY to ₹ 696 crore, with RoA steady at 2.6%. Stage 3 asset has increased by 5 bps QoQ at 2.84%, though PCR declined by 29 bps QoQ at 4.03%.
Views: Continued growth with selective approach remains positive, however, increase in Stage 3 asset coupled with decline in PCR needs clarity. However, commentary on experience in rural finance from asset quality perspective remains watchful.
Impact: Neutral