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INVESTMENT INSIGHTS

Check Before You Invest : L&T Finance Ltd

BSE: 533519 NSE: LTF ISIN: INE498L01015
  |   Sector:  BFSI   |   Industry:  Finance - NBFC

Snapshot

Q.1 Which industry/sub-sector does L&T Finance Ltd belong to?
L&T Finance Ltd belongs to the BFSI sector, operating specifically within the Finance - NBFC segment.
Q.2 Is L&T Finance Ltd a good quality company?
L&T Finance Ltd is a weak quality company, based on a inconsistent 10-year financial track record.
Q.3 Is L&T Finance Ltd undervalued or overvalued?
L&T Finance Ltd appears Somewhat overvalued, as its key valuation ratios are above with their past averages.
Q.4 Is L&T Finance Ltd a good buy now?
L&T Finance Ltd is a neutral opportunity now, based on stable price trend analysis suggesting prices may move sideways. However, you need to check its quality and valuation before making a decision

Performance Analysis

Q.1 Total Income growth of L&T Finance Ltd?
L&T Finance Ltd Operating Income growth is 17.29% for FY-2025, which is above its 5-year CAGR of 2.45%, indicating faster growth.
Q.2 Return on Assets of L&T Finance Ltd?
L&T Finance Ltd Return on Asset is 2.4%, which is above its 5-year historical median of 0.8%, indicating improved earnings on assets.
Current Level 5-year
Historic Median
NPM% 16.6 7.12
PPOP% 19.92 12.68
RoA% 2.4 0.8
Q.3 Return on Equity (ROE) of L&T Finance Ltd?
L&T Finance Ltd Return on Equity is 10.8% for FY-2025, which is above its 5-year historical median of 4.5%, indicating the business is making better use of its shareholders capital.
Q.4 Pre-provisioning operating profit margin of L&T Finance Ltd?
L&T Finance Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 19.92% for FY-2025, which is above its 5-year median(12.68%), indicating increasing margins.
Q.5 Net Profit Margin of L&T Finance Ltd?
L&T Finance Ltd Net Profit Margin, which is the difference between the rate of interest earned on assets and the rate of interest paid on liabilities, is 16.6% for FY-2025, which is above its 5-year median( 7.12%), indicating increasing margins.
Q.6 Total Asset growth of L&T Finance Ltd?
L&T Finance Ltd Total Asset growth is 17.61% for FY-2025, which is above its 5-year CAGR of 1.88%, indicating faster growth.
Q.7 Capital Adequacy ratio of L&T Finance Ltd?
L&T Finance Ltd Capital Adequacy ratio (CAR) is 22.27% for FY-2025, which is above the regulatory requirement of 15%, indicating strong capital position.

Ownership & governance

Q.1 Promoter shareholding and pledge status of L&T Finance Ltd?
Promoters hold 65.99% of the L&T Finance Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

Q.1 AUM Growth of L&T Finance Ltd vs Industry Peers?
L&T Finance Ltd AUM CAGR is 1.88%, compared to the 5-year industry median CAGR of 15.99%, indicating slower growth and losing its market share.
Q.2 Profit metrics (NPM, PPOP, RoA) of L&T Finance Ltd vs industry peers
L&T Finance Ltd profit metrics are in line with the industry median level of 9.53%, indicating similar profitability compared to peers.
Profit Metrics
Current Level 5-year
Industry Median
NPM% 16.6 13.77
PPOP% 19.92 12.76
RoA% 2.4 2.05
Q.3 Operating efficiency of L&T Finance Ltd vs industry peers?
L&T Finance Ltd ROCE (7.9) is below the industry median of (9.05); while the current ROE (4.5) are below than the 5-year average Industry ROE (12.85). This shows that the business is positioned in the bottom quartile of the industry.
Operating Efficiency
Current Level 5-year
Industry Median
NPM% 16.6 13.77
PPOP% 19.92 12.76
RoA% 2.4 2.05
ROCE% 8.7 9.05
ROE% 10.8 12.85

Valuation & price assessment

Q.1 Stock return of L&T Finance Ltd over the last decade?
Over the last 9 years, the stock has delivered a CAGR of 14.8% based on the current price.
Q.2 What return has the stock given over the last decade?
9Y 5Y 3Y 1Y
Share Price
CAGR		 14.8% 26.3% 44.6% 68.3%
Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?
Valuation Ratios Current 5-year
Historic Median		 5-year
Industry Median
Price to Earnings 23.49 17.70 28.96
Price to Book 2.5 1.69 1.11
Price to Sales 3.91 2.81 9.10
EV to EBITDA 12.71 12.44 11.77
Q.4 Valuation ratios of L&T Finance Ltdvs historical and industry averages?
The current Price to book ratio (P/B) 2.5% is higher than its historical median of 1.69%, indicating that at the current price the stock is overvalued. However, you need a deeper analysis to make a better judgement.

Strategic outlook

Q.1 Does its ROIC exceed its WACC?
L&T Finance Ltd return on invested capital (ROIC) is 6.28% for FY-2025, is lower than its estimated weighted average cost of capital (WACC) of 11.25%, indicating value erosion.

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6. Mah & Mah Finl. Serv
7. Indian Ren. Energy
8. Poonawalla Fincorp

Check trending companies

1. Aadhar Housing Finance Ltd.
2. State Bank Of India
3. Power Finance Corporation Ltd.
4. Bajaj Auto Ltd.
5. Mahindra & Mahindra Ltd.
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