L&T Finance Holdings slipped 3% to Rs 101.95 after the company's consolidated net profit fell 51.4% to Rs 287.75 crore on 3% decline in total income to Rs 3622 crore in Q3 December 2020 over Q3 December 2019.
The NBFC's profit before tax fell 52% to Rs 348.67 crore in Q3 December 2020 over Q3 December 2019. Total tax expense in Q3 December 2020 stood at Rs 60.92 crore as compared to Rs 133.75 crore paid in Q3 December 2019. The result was announced after market hours on Friday, 15 January 2021.L&T Finance said that the quarter saw a strong economic recovery across sectors led by rural and infrastructure. Higher farmer income, positive rural sentiment, combined with the festive season helped maintain market share in farm equipment and two-wheeler finance.
As a prudent measure, the company continues to carry an additional provision of Rs 1,739 crore in Q3 December 2020. This is on account of macro prudential provisions, COVID-19 and accelerated Expected Credit Losses (ECL) provisions on Stage 1 & 2 assets, which are over and above the ECL model on GS3 and Stage 1 & 2 assets.
The firm said it is focused on leveraging the power of data and analytics to build a 'collection-led disbursement' model, which, along with economic recovery in the rural segment, has led to a significant improvement in collection efficiency and a strong pickup in disbursements (QoQ). The sentiment continues to remain positive in the rural sector. Within the focused lending book, the rural finance book grew by 4% YoY, aided by growth in farm equipment finance book by 18%, and the two-wheeler finance book by 9%. The home loan segment grew by 3% YoY.
The NBFC assured that it continues to maintain a strong capital adequacy of 21.82%. The Gross Stage 3 assets of the company stood at 5.12% in Q3 December 2020 of its book, showing a reduction of 82bps YoY. The company also strengthened the PCR on Stage 3 assets from 57% in Q3 December 2020 to 64% in Q3 December 2020.
The NBFC's Average Assets under Management (AAUM) of the investment management business stood at Rs 68,976 crore in Q3 December 2020. The AUM for equity and fixed income asset classes as on 31 December 2020 stood at Rs 38,906 crore and Rs 22,483 crore, with a growth of 9% and 20%, respectively, QoQ basis.
Commenting on the financial results, Dinanath Dubhashi, MD & CEO, L&T Finance said, Post Covid, the rural economy has performed better than urban and this trend is reflected in our disbursements, which are almost at pre-covid levels. The festive season uptick and a steady recovery in collection volumes also underline our rural performance. Our strong performance in Infra disbursements should be seen alongside the sell-down volumes, which have increased on a YoY basis. It allows us to generate more fee income while proportionately reduces the need for allocating higher capital.
Sharing an outlook for Q4 FY21, Dubhashi further added, In the long term, structural changes such as government initiatives, normal monsoons and better infrastructure will continue to improve financial health in rural. We will maintain focus on capitalizing on our market leadership position in Farm Equipment and Two-Wheeler Finance to drive business volumes.
LTFH is a financial holding company offering a focused range of financial products and services across rural, housing and infrastructure finance sectors, as well as in mutual fund products, through its wholly owned subsidiaries.
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