L&T Finance Hits Record High After UBS Initiates Bullish Coverage

Shares of L&T Finance Ltd. gained nearly 6% to hit a record high on Monday after UBS Research initiated coverage with a 'buy', citing that the company's earnings per share will grow at a compound annual growth rate of 26% for fiscal 2024-2026.

The favourable risk-reward also prompted the research firm to set the target price at Rs 231 apiece, implying a potential upside of 27% from the previous close.

As it nears completion of its loan book shift from wholesale to retail and simplifies its holding structure into a single lending unit after more than five years, the company is now on track to expand its balance sheet, the research firm said.

"LTF's loan book at the end of fiscal 2024 was 13% lower than it was in fiscal 2020, as it reduced its wholesale assets from 60% to 6% of the book while growing its retail assets to 94% of the book," the note said.

UBS Research also notes that LTF's new products, such as small and medium enterprise financing, consumer loans, and full wholesale unwind, will improve the return on assets.

Shares of L&T Finance rose as much as 5.80% during the day to Rs 191.60 apiece on the BSE. It was trading 4.91% higher at Rs 190 apiece, compared to a 0.49% advance in the benchmark NSE Nifty 50 as of 1:36 p.m.

The stock has risen 38.67% in the last 12 months and 15.27% on a year-to-date basis. The total traded volume so far in the day stood at 1.9 times its 30-day average. The relative strength index was at 66.71.

Eighteen out of the 21 analysts tracking L&T Finance have a 'buy' rating on the stock and three suggest a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 1.4%.