L&T Finance reports record FY25 PAT of Rs 2,644cr, fueled by strong retail growth

L&T Finance Ltd., one of India’s leading non-banking financial companies, delivered a landmark financial performance for the fiscal year ended March 31, 2025, reporting an all-time-high consolidated Profit After Tax (PAT) of ₹2,644 crore. This marks a 14% year-on-year (YoY) increase, reinforcing the company’s strategic focus on building a digitally empowered, customer-centric retail finance franchise under its ‘Lakshya 2026′ roadmap.

In the fourth quarter of FY25, the company continued its growth momentum, posting a PAT of ₹636 crore, representing a 15% YoY rise. L&T Finance Ltd’s Board recommended a final dividend of ₹2.75 per share for FY25, the highest ever declared by the company, reflecting its robust profitability and strong capital position.

How Did L&T Finance Ltd Achieve Record Profitability in FY25?

L&T Finance Ltd attributed its exceptional performance to a combination of accelerated retailisation, disciplined risk management, resilient asset quality, and proactive liability management. The company’s retail loan book grew to ₹95,180 crore, a 19% YoY increase, representing 97% of the consolidated lending portfolio.

Retail disbursements reached ₹60,040 crore for FY25, an 11% YoY rise, with secured asset segments like Home Loans and Loans Against Property (LAP) growing 27% YoY. Personal loans posted a remarkable 42% YoY increase in disbursements, supported by new partnerships with platforms such as PhonePe, Amazon Pay, and CRED.

The company’s net interest margin combined with fee and other income stood resilient at 10.59% during the year, despite a volatile interest rate environment. Return on Assets (RoA) reached an all-time-high of 2.44%, while Return on Equity (RoE) improved by 52 basis points YoY to 10.87%.

What Drove L&T Finance Ltd’s Retail Lending Expansion in FY25?

A critical driver behind the financial uplift was L&T Finance Ltd’s deep-rooted, pan-India retail distribution network. With over 2 lakh villages covered through more than 2,085 rural centres and over 212 urban branches, the company capitalised on its vast footprint and customer database exceeding 2.6 crore individuals.

This strong presence enabled a notable rise in cross-sell and up-sell opportunities, contributing to 36% of the value and 49% of the volume of repeat disbursements in Q4 FY25 alone.

Within the retail lending portfolio, specific segments demonstrated outstanding growth. Housing Loans and LAP grew by 35% YoY to ₹24,929 crore, SME Finance expanded by 67% YoY to ₹6,524 crore, and Personal Loans surged by 34% YoY to ₹8,648 crore. Farmer Finance also grew healthily by 10% YoY, aided by favourable monsoon conditions and improved rural liquidity.

How Has Asset Quality and Credit Cost Evolved for L&T Finance Ltd?

Despite significant loan book expansion, L&T Finance Ltd maintained resilient asset quality. Gross Stage 3 (GS3) assets stood at 3.29% in Q4 FY25, a marginal increase from 3.23% in the preceding quarter. Net Stage 3 (NS3) assets remained stable at 0.97%.

Credit costs showcased a disciplined trend, standing at 2.50% for FY25 compared to 2.67% in FY24. Notably, the FY25 credit cost calculation benefited from the utilisation of ₹400 crore worth of macroprudential provisions. Management continued to actively manage risk exposures through calibrated disbursement strategies, especially in Rural Business Finance where annual disbursements moderated by 3% YoY amidst sectoral fluidity.

What Are the Key Strategic Initiatives That Powered FY25 Growth?

L&T Finance Ltd’s technology-first strategy remained pivotal in FY25. The company fully implemented ‘Project Cyclops 2.0,’ its AI and ML-powered underwriting engine for Two-wheeler Finance, with progressive rollouts in Farm Equipment Finance underway. This initiative contributed to improved customer profiling and enhanced portfolio quality.

Additionally, the company launched its upgraded PLANET app 3.0 (Beta), a digital channel that recorded over 1.72 crore downloads, with substantial traction in rural areas. Through its digital channels, L&T Finance Ltd collected over ₹3,800 crore and sourced loans worth over ₹12,700 crore.

The company further augmented its retail secured portfolio by initiating the acquisition of Paul Merchants Finance Private Limited’s gold loan business, aiming to accelerate time-to-scale in this lucrative segment by an estimated 36 months.

What Does L&T Finance Ltd’s Stock Performance and Market Sentiment Reveal?

As of April 25, 2025, L&T Finance Ltd’s stock closed at ₹173.10, reflecting a 3.57% decline on the day. However, on a year-to-date basis, the stock remains robust, posting a 27.55% gain, reflecting investor confidence in its business transformation.

The stock has traded within a 52-week range of ₹129.15 to ₹194.20, and currently maintains a trailing twelve-month P/E ratio of 17.53 and a P/B ratio of 1.85, slightly ahead of sectoral averages. Despite near-term volatility, the longer-term trend suggests continued market support.

Institutional investors remain positive, with Foreign Institutional Investors (FIIs) increasing their stake to 5.48% from 5.30% during the March 2025 quarter. Mutual Funds also raised their holdings from 6.37% to 7.06%. Additionally, parent company Larsen & Toubro Limited maintains a strong 67% promoter holding, underscoring strategic continuity.

Should Investors Buy, Hold, or Sell L&T Finance Ltd?

Analyst sentiment remains largely bullish, with approximately 80% recommending a ‘Buy’ rating. The average target price of ₹179.19 implies modest upside potential of 3.5% from current levels. Short-term projections caution some volatility, suggesting a possible dip of around 3.79% over the next 14 days, but the long-term trajectory remains firmly positive.

Buy: Long-term investors may view L&T Finance Ltd favourably given its strong retail orientation, growing digital channels, and consistent profitability metrics.

Hold: Existing investors may prefer to maintain their positions, focusing on quarterly performance indicators and digital transformation milestones.

Sell: Short-term traders may exercise caution due to immediate market fluctuations, especially following strong YTD stock performance.

Overall, the sentiment around L&T Finance Ltd remains constructive, aligning with its strategic digital-first journey towards becoming a leading retail-focused fintech powerhouse under Lakshya 2026.

How Did L&T Finance Ltd Perform on ESG and CSR Initiatives in FY25?

L&T Finance Ltd reaffirmed its commitment to environmental, social, and governance (ESG) principles. It ranked in the top decile in the S&P Global Corporate Sustainability Assessment for the diversified financial services and capital markets industry and maintained a ‘Low Risk’ ESG Risk Rating of 16.1 as assessed by Sustainalytics. The company’s MSCI ESG rating stood at ‘A’.

Under its flagship CSR programme ‘Digital Sakhi‘, over 2.3 lakh rural women were educated on digital and financial literacy through a cadre of over 1,110 trained mentors. Additionally, the company provided flood relief to over 13,000 affected families across Bihar, underscoring its commitment to community resilience.