L&T Finance Q3FY25: Retail growth shines amid macro challenges
L&T Finance Ltd. (LTF), one of India‘s leading Non-Banking Financial Companies (NBFCs), demonstrated resilience in Q3FY25 despite macroeconomic pressures. While the consolidated profit after tax (PAT) declined slightly to ₹626 crore from ₹640 crore a year earlier, the company’s focus on retailisation and innovation paved the way for a strong performance in its retail portfolio, which grew by an impressive 23% year-over-year (YoY) to ₹92,224 crore.
How Is L&T Finance Driving Retail Growth in India?
Retailisation remains a cornerstone of LTF’s strategy, with 97% of its loan book now focused on retail segments. In Q3FY25, the company disbursed ₹15,210 crore in retail loans, a 5% increase compared to the same quarter last year. This growth reflects LTF’s ability to leverage its wide geographic footprint of over 2,000 rural and 185 urban branches, along with a robust database of 2.5 crore customers.
Major contributors to this growth included loans against property and housing loans, which surged 41% YoY, and farmer finance, which recorded a 9% increase. The company’s calibrated approach ensured the sustainability of this growth while maintaining high credit quality across all verticals.
What Role Does Technology Play in L&T Finance’s Success?
Innovation through technology has been pivotal to LTF’s success. The company expanded its AI-driven initiatives by introducing “Knowledgeable AI” (KAI), a virtual home loan advisor designed to simplify the borrowing process. Additionally, LTF’s partnerships with digital platforms such as Amazon Pay and PhonePe have enhanced its customer offerings, providing seamless digital lending solutions for personal loans and consumer credit.
The company also hosted RAISE’ 24, India’s premier AI-themed event for the banking and financial services sector, showcasing the transformative potential of artificial intelligence in improving financial services.
How Has L&T Finance Addressed Sectoral Challenges?
Macro challenges, particularly in the rural business finance segment, impacted disbursements, which fell 16% YoY. Despite this, LTF adopted a risk-calibrated disbursement strategy to navigate these headwinds effectively. Its proactive asset-liability management limited the increase in borrowing costs, ensuring financial stability.
The two-wheeler finance segment also saw disbursements decline by 5% YoY, as LTF shifted its focus to higher-quality customers through enhanced credit guardrails and documentation. This strategic realignment has laid the foundation for sustained growth in the future.
How Does L&T Finance Align with ESG Goals?
L&T Finance continues to make significant strides in its environmental, social, and governance (ESG) initiatives. The company received a low-risk ESG rating of 16.1 from Sustainalytics and avoided approximately 11,000 metric tons of carbon emissions through electric vehicle (EV) financing and other sustainability projects.
Notable CSR initiatives include the flagship “Digital Sakhi” program, which has empowered over 230,000 rural women with digital and financial literacy skills. Additionally, LTF financed over 51,000 electric vehicles in Q3FY25, underscoring its commitment to green finance.
Expert Insights: The Road Ahead for L&T Finance
Sudipta Roy, Managing Director & CEO of LTF, expressed optimism about the company’s strategic initiatives. He stated, “Despite certain macro challenges, our investments in technology and focus on building a robust retail portfolio are delivering strong results. As we move forward, we remain committed to innovation and customer-centric solutions.”
With its Lakshya 2026 strategy, L&T Finance aims to transition into a digitally enabled retail finance company, emphasizing customer-centric solutions over product-centric approaches. This strategic shift, combined with a focus on ESG priorities, positions LTF to sustain its growth trajectory in a competitive market.
Why L&T Finance’s Performance Matters
L&T Finance’s ability to navigate sectoral challenges while achieving retail growth reflects its strong operational model and strategic focus. By integrating technology, expanding partnerships, and prioritizing sustainability, LTF is setting new benchmarks in the NBFC sector. As the company looks to the future, its Lakshya 2026 plan promises continued innovation and customer-centric growth.
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