L&T Finance Q3 Results Review - Treading A Path To Retailisation: ICICI Securities
The overhang of mark-down of wholesale portfolio was addressed with incremental provisioning.
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ICICI Securities Report
L&T Finance Holding Ltd. has reported adjusted consolidated profit after tax of Rs 4.54 billion in Q3 FY23 (compared to Rs 4.1 billion/ Rs 2.62 billion/ Rs 3.42 billion/ Rs 3.26 billion/ Rs 2.23 billion/ Rs 1.77 billion in Q2 FY23/ Q1 FY23/ Q4 FY22/ Q3 FY22/ Q2 FY22/ Q1 FY22, respectively).
Aligning to Lakshya 2026 goals, retail portfolio scaled up 10% QoQ/34% YoY and it has commenced accelerated reduction in wholesale portfolio (down 18% QoQ/24% YoY).
This, coupled with improvement in net interest margins plus fee (8.8%), led to better than estimated core operating performance. It reported capital gains of Rs 26.1 billion (pre-tax) from stake sale in L&T Investment Management.
Nonetheless against this, L&T Finance created a one-time provision of Rs 26.87 billion (equivalent to 8% of wholesale book) to facilitate accelerated sell down of wholesale book.
The management believes this provision adequately covers any downside risks of an accelerated sell down. It has also proposed the merger of its subsidiary lending entities - L&T Finance Ltd. and L&T Infra Credit Ltd. with itself, which is likely to result in a simple, unified structure.
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