L&T Finance Targets 25% CAGR, Focuses On Retail Lending

L&T Finance Ltd is aiming at a 25-per cent compound annual growth rate over the next few years, with focus on consolidating its retail lending business, a top company official said on Wednesday.

The financial services arm of Larsen & Toubro plans to completely exit the wholesale segment by 2026, transforming itself into a 100% retail non-banking financial company from nearly 94% at present.

The company’s new offering – ‘Complete Home Loan’ – signifies a fresh impetus to its mortgage business, he said.

The lender also expects this product to surpass microfinance in terms of book size in the near future.

"Fueled by the revival in credit offtake, we will maintain our robust growth trajectory of 25% CAGR over the next few years. With the larger ticket size of home loans, this portfolio is expected to surpass microfinance assets in the coming years," MD & CEO of L&T Finance Sudipta Roy said.

"However, even if the mortgage book size surpasses microfinance, micro-lending will likely remain our most profitable segment due to its inherent nature," Roy said.

He also maintained that L&T Finance will consolidate its existing lines of financial services for at least the next two years, as there remains a strong growth potential in its current offerings.

At present, micro-credit lending accounts for 31% of the company's total book size of Rs 80,000 crore, followed by mortgage and loans against property, which contribute 23%.

The home loan business focuses on tier-I and tier-II cities, with a minimum ticket size of Rs 30 lakh.

L&T Finance actively collaborates with large builders, and it also operates in segments of tractor finance, two-wheeler finance and personal loans as well as the SME sector, the official said.

"Kolkata is a key market for us," said Sanjay Garyali, Chief Executive - Urban Finance.

"We expect to achieve stronger growth in the eastern region through the branding of our new home loan product," Garyali added.