 "L&T Finance Holdings plans to raise Rs 40 bn via QIP, appoints four bankers")
L&T Finance Holdings, a subsidiary of Larsen & Toubro (L&T), plans to tap the market for a qualified institutional placement (QIP).
The non-banking financial firm has appointed four investment bankers — Citi, Edelweiss, Motilal Oswal and JM Financial — to manage the placement, said sources. The issue size could not be ascertained but is expected to be in the region of Rs 30-40 billion.
The board of directors of the company will meet January 25 to approve the unaudited financial results for the quarter ended December. "As a matter of policy we do not comment on market speculation," said the company in an email response.
In the past one year, the share price of L&T Finance Holdings has surged 77 per cent against 29 per cent gains made by the 30-share BSE benchmark Sensex. The company had listed in August 2011 and has since gained 243 per cent. On Thursday, the shares slid 1.3 per cent to Rs 171.3.
L&T Finance Holdings is among the top five NBFCs, with a market capitalisation of Rs 316 billion, ahead of peers such as M&M Finance, Muthoot Finance and Edelweiss Financial Services.
According to analysts, the focus on fee income through sell-down and DCM operations as well as on cost efficiencies by streamlining businesses and digitising operations and increasing profitability contribution by the investment management business, augur well for the company.
"As of 1HFY18, tier I ratio stood at 13.3 per cent, 14.1 per cent and 9.7 per cent for L&T Finance, L&T Infra finance and L&T Housing Finance, respectively. We believe the company could raise capital over the next 12 months given strong growth outlook in each of the business," observed a December 5 note put out by JM Financial. "The stock trades at 2.8x book FY19E. Any capital raise at the current multiple would be capital accretive and would provide further upside to the stock," the report further added.
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L&T Finance Holdings is a financial holding company with interests spanning financial products and services across the corporate, retail and infrastructure finance sectors, as well as fund products and investment services.
Of the 17 brokers tracking L&T Finance, most have a 'buy' rating or are 'overweight' on the stock. Only two brokers have given a 'reduce' call.
For the quarter ended September 2017, the company posted a net profit of Rs 6.7 billion, a 47 per cent increase over the year-ago period.