L&T Finance Q2 Results Review - Inline; MFI Performance Better Than Industry; Retains 'Buy': Motilal Oswal

Motilal Oswal Report

L&T Finance Ltd. reported 17% YoY growth in profit after tax to Rs 7 billion (in line) in Q2 FY25. Pre provision operating profit grew ~23% YoY to ~Rs 15.9 billion (in line).

Credit costs stood at Rs 6.5 billion (versus our estimate of Rs 6 billion), translating into annualized credit costs of ~2.6% (versus 2.4% in Q1 FY25 and 2.6% in Q2 FY24).

Write-offs stood at Rs 6.6 billion (Rs 4.8 billion in Q1). Consolidated RoA/RoE stood at 2.6%/11.7% in Q2.

Retail assets contributed ~96% to the loan mix (95% in 1Q). Retail loans grew ~28% YoY, led by healthy growth in two-wheeler, home loans, loan gagainst property, and SME.

L&T Finance has started to regrow its personal loans book, up 8% QoQ. Given the sectoral stress, rural business loans (microfinance) grew 3% QoQ.

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