L&T Finance Holdings Rises As Morgan Stanley Maintains 'Equal-Weight' Rating
Morgan Stanley has set a target price of Rs 95, implying a 3% gain.
Shares of L&T Finance Holdings Ltd. gained the most since Oct. 4, 2022, after Morgan Stanley rated the company as 'equal-weight'.
The company's October-December quarter was driven by "broad-based" growth in retail loans and narrowing wholesale assets under management, the brokerage said.
Morgan Stanley maintains an equal-weight rating on the stock and has set a price target of Rs 95, implying a 3% gain.
Shares of the company rose 3.73% to Rs 95.90 per share, while the benchmark Nifty 50 fell 0.28%. The total volume so far was 7.4 times its 30-day average.
Out of the 13 analysts tracking the company, 10 maintain a 'buy' rating, two suggest 'hold,' and one has a 'sell' rating on the stock, according to Bloomberg data. The 12-month consensus price target implies a downside of 0.6%.
Morgan Stanley On L&T Finance Holdings
In the October-December quarter, retail AUM grew 34% year-on-year and 9.5% quarter-on-quarter to Rs 57,000 crore, which now forms 64% of consolidated AUM.
As per the brokerage, the retail loan growth was broad-based, with microloans being the largest contributor.
Retail disbursements rose 53% year-on-year and 13% quarter-on-quarter to Rs 11,600 crore mainly driven by tractor and two-wheeler segments, overall aided by festive season demand.
Wholesale AUM shrank 17.5% quarter-on-quarter to Rs 31,000 crore in the said quarter.
The company announced the merger of its wholly-owned lending subsidiaries into the listed holding company.
Operational performance in retail and wholesale segments is on track; however, the consolidated return on equity still remains less than 9% owing to excess capital, the brokerage said.
Brokerage believes most of the positives are priced in and further upside is limited
What Could Lead To Stock Movement?
Risks To Upside:
Faster-than-expected retail loan growth.
Steps to sweat excess capital faster and accelerate the return on equity pickup.
Risks To Downside:
Slower run-down in wholesale business.
Underutilisation of capital as a result of slower retail loan growth.