L&T Finance gains 4% after 3.5% equity changes hands via block deals

As per reports, Bain Capital, and BNP Paribas were looking to offload remaining 3.5 per cent stake in LTF in a block deal today

L&T Finance block deal: Shares of L&T Finance (LTF) gained 4 per cent to Rs 177.25 on the BSE in Thursday's intraday trade after over 3 per cent of the total equity of the company changed hands via block deals. The stock of the investment company is trading close to its 52-week high of Rs 179 touched on February 5, 2024.

With today's gain, the stock of LTF has rallied 19 per cent in the past seven trading days. In the past one year, it has surged 61 per cent as against 22 per cent rise in the BSE Sensex.

 

Till 09:26 AM, as many as 88.66 million equity shares, representing 3.56 per cent of total equity of LTF, had changed hands on the BSE, exchange data shows. The names of the buyers and sellers could not be ascertained immediately.

As per reports, however, Bain Capital, and BNP Paribas were looking to offload their remaining 3.5 per cent stake in LTF in a block deal today. The transaction would consist of off-loading 88 million shares at a floor price of Rs 169.17 per share.

LTF is one of the leading non-banking financial companies (NBFC) which provides a diverse range of financial products and services. LTF offers various financial products catering to both rural and urban customers, including Rural Group Loans and Micro Finance and Urban Financing like Two-Wheeler Finance, Consumer Loans, and Home Loans.

The company has further launched new products such as Warehouse Receipt Finance and Kisan Suvidha, an automated journey facilitated within the PLANET App. This has helped LTF address the diverse needs of rural and urban consumers, reflecting a shift towards a customer-centric approach.

LTF is focused on five-pillar strategy: (a) customer acquisition: Continued network expansion with 2W distribution points increased to 10,000+, new customer acquisition at 6.8lakhs, (b) Sharpening credit underwriting: In-house proprietary risk engine is robust based on bureau, account aggregator & alternate data signals, (c) Futuristic digital architecture: In-house engineering for enhanced time to market, providing superior customer experience. In-house collections app went live this quarter, (d) Heightened Brand visibility: Continued focus on increased brand awareness which should aid product awareness and (e) Capacity building: Created strong advisory framework and inducted seasoned leaders across key businesses.

While retailisation of balance sheet at 94 per cent is reflecting on yields and book expansion, the uptrend should prop FY25 earnings momentum. The management expects stable growth trajectory with focus on credit costs, focused execution in terms of surface areas of distribution and in turn mopping up market share across retail loans, analyst at Elara Capital had said in their Q4 result update. The brokerage firm has a 'buy' rating on LTF with a target price of Rs 209 per share.

LTF's core retail business performance remained strong, capitalising on strong macros, driven by healthy retail assets growth, better margins, and lower credit cost. The wholesale business continued to run down, in line with its stated strategy. A favourable cycle has helped the company to completely reorient into a retail franchise in the last two years. It is now looking at balancing the business matrices while pursuing growth, according to Sharekhan.

"LTF has re-oriented itself into a retail franchise, led by a favourable cycle. The company is now looking at balancing the business matrices while pursuing growth. The focus is on creating a sustainable and predictable retail franchise, but execution remains key monitorable," the brokerage firm said. The brokerage firm has a 'buy' rating on LTF with a target price of Rs 185 per share.

However, as per India Ratings, the growth rate in assets under management (AUM) of NBFCs will moderate in FY25 compared to FY24. Following increase in risk weights by the Reserve Bank of India (RBI), costs of funds for NBFCs from banks have increased and are likely to remain elevated in FY25. The incremental funding requirement for the NBFC sector will be Rs 4.5 trillion in FY25 and the volume of public NCDs might go up in FY25, LTF said in its FY24 annual report.