L&T Finance Ltd. (LTF), a leading Non-Banking Financial Company (NBFC) in India, has reported a significant growth in its profit after tax (PAT) for the second quarter ending September 30, 2024. The company’s PAT reached ₹696 crore, reflecting a 17% year-on-year increase from ₹595 crore in Q2 FY24. This growth comes despite sectoral headwinds and a volatile macroeconomic environment, highlighting the company’s robust and resilient business model.

L&T Finance Ltd. disclosed its consolidated loan book has expanded by 18% year-on-year, reaching ₹93,015 crore, marking the highest level since Q1 FY20. The retail portfolio grew by 28% to ₹88,975 crore, demonstrating the company’s strong retail franchise and its focus on retailisation, which now constitutes 96% of its overall loan book. The company’s return on assets (RoA) improved to 2.60%, an increase of 18 basis points year-on-year, while its return on equity (RoE) stood at 11.65%, an 84 basis point rise from the same period last year.

Expanding Retail Portfolio and Digital Transformation

The company reported that its retail disbursements for Q2 FY25 amounted to ₹15,092 crore, a 12% increase from the previous year. Its dominant retail franchise, backed by a distribution network spanning over 2 lakh villages and 1,900 rural meeting centres, continues to drive growth. The company’s urban presence is also substantial, with over 160 branches and more than 13,200 distribution points. L&T Finance Ltd. currently serves around 2.5 crore customers, with an even split between rural and urban areas.

Sudipta Roy, Managing Director and CEO of L&T Finance Ltd., emphasized the company’s commitment to digital transformation through its Lakshya 2026 initiative. He stated that the firm’s next-generation credit underwriting engine, ‘Project Cyclops,’ launched in the two-wheeler finance segment, would be scaled across other products in the coming quarters. Roy highlighted that this technology, combined with partnerships with major tech firms, is expected to lower acquisition costs while maintaining superior credit quality.

Strategic Asset Management and Sectoral Outlook

L&T Finance Ltd. has also successfully managed its asset quality, with Gross Stage 3 (GS3) assets declining to 3.19% from 3.27% year-on-year. Net Stage 3 (NS3) assets stood at 0.96%, up slightly from 0.82% in the previous year. The company’s credit cost remained stable at 2.59%, despite the challenging economic environment.

Commenting on the future, Roy noted that while the sector may face persistent challenges in the next two quarters, L&T Finance Ltd. remains proactive in its strategy. The firm is prepared to recalibrate its business objectives dynamically, focusing on positive credit outcomes rather than mere expansion of assets under management.

Expanding Digital Finance and Sustainability Initiatives

L&T Finance Ltd. is increasingly leaning into technology-driven solutions. The company has achieved a 100% paperless journey for its rural group loans, two-wheeler finance, farm equipment finance, and personal loans. Furthermore, 100% of loans are now disbursed digitally across both rural and urban regions, with digital collections making up 29% in rural and 95% in urban areas.

The company’s ESG and CSR initiatives are central to its strategy. L&T Finance Ltd. has implemented projects like Digital Sakhi, focusing on women’s empowerment through digital and financial literacy, and launched environmental conservation efforts, such as Project Prakruti, which planted 1,00,000 saplings in Karnataka. The company has also been active in disaster relief efforts, supporting communities affected by floods in Bihar, Uttar Pradesh, and Telangana.

Expert Insights: Navigating the Future

Experts believe that L&T Finance Ltd.’s emphasis on digital transformation and its proactive approach to asset management position it well for future growth. By leveraging technology and expanding its digital finance offerings, the company is expected to navigate ongoing economic volatility more effectively than its peers. Analysts suggest that while sectoral challenges are likely to persist, the company’s focus on credit quality and efficient portfolio management could mitigate potential risks.

L&T Finance Ltd. is optimistic about its long-term strategy, with its Lakshya 2026 plan laying the foundation for a top-tier, digitally-enabled, customer-centric retail finance business. As the company scales its digital acquisition engines and partners with major tech firms, it aims to maintain growth momentum while ensuring financial stability.

  Apurva Rathod, BSE Limited, Dalal Street, Digital Sakhi, Karnataka, Kolar, L&T Finance Ltd., Lakshya 2026, Mumbai, National Stock Exchange of India, Non-Banking Financial Company, Project Cyclops, Project Prakruti, SEBI, Sudipta Roy