LTF - L&T Finance Ltd

📊 NSE: LTF 🏢 Finance & Investments 📅 Last Updated: 12/14/2025 9:09

💰 Financial Performance

Revenue Growth by Segment

Total income grew 13.4% YoY to INR 15,930 Cr in FY25 from INR 14,043 Cr in FY24. Retail loans, the primary growth engine, grew 19% YoY in Q1FY26. Within retail, Farmer Finance represents 16% of AUM, Rural Business/Microfinance 29%, and Urban Finance (Two-wheelers, Personal, Home Loans) 45%. Wholesale lending has been intentionally reduced, now comprising only 2% Infrastructure and 3% Real Estate finance as of June 2024.

Geographic Revenue Split

Not disclosed in available documents, though the company maintains a balanced distribution across Rural and Urban markets, leveraging a customer base of ~2.6 crore.

Profitability Margins

Profit After Tax (PAT) for FY25 was INR 2,643 Cr with a Return on Managed Assets (RoMA) of 2.4%, up from INR 2,317 Cr (2.2% RoMA) in FY24 and INR 1,536 Cr (1.4% RoMA) in FY23. This upward trend is driven by the strategic shift toward higher-margin retail assets and the sell-down of legacy wholesale books.

EBITDA Margin

Annualized RoMA stood at 2.3% in Q1FY26. PAT for Q1FY26 was INR 701 Cr, a slight increase from INR 685 Cr in Q1FY25. The stability in RoMA despite industry-wide pressure on unsecured lending reflects strong risk-calibrated growth.

Capital Expenditure

While traditional CAPEX is not applicable, the parent L&T has provided significant capital support, infusing ~INR 1,900 Cr in FY2021 and INR 2,000 Cr in FY2018. LTF maintains a gearing of 3.7x as of June 2025, well below the steady-state ceiling of 7.5x.

Credit Rating & Borrowing

LTF maintains a superior credit profile supported by L&T's 66.2% shareholding. Average borrowing cost was 6.9% in Q1FY25, which is lower than most NBFC peers, providing a competitive advantage in lending spreads.

⚙️ Operational Drivers

Raw Materials

For LTF, 'raw materials' are debt capital. The resource profile as of Q1FY25 consists of: Bank borrowings (56%), NCDs (34%), Commercial Paper (8%), and others (2%).

Import Sources

Not applicable as the company sources capital from domestic and international financial markets.

Key Suppliers

Primary capital providers include domestic banks (providing 56% of funds) and capital market investors for NCDs and CPs.

Capacity Expansion

Current capacity is measured by AUM, which stood at INR 1,02,314 Cr as of June 30, 2025. The retail book reached INR 99,816 Cr (98% of total AUM), expanding from 94% a year prior.

Raw Material Costs

Borrowing costs (interest expense) were 6.9% in FY24 and Q1FY25. This low cost of funds is maintained through L&T's brand name and strategic importance to the parent.

Manufacturing Efficiency

Operational efficiency is tracked via productivity metrics, which increased by 14% in the tractor segment. New tractor disbursements grew by 13% without adding additional manpower.

Logistics & Distribution

Distribution is driven by digital platforms like the PLANET App and a physical presence across rural and urban India. Distribution strength is cited as a key growth engine.

📈 Strategic Growth

Expected Growth Rate

15%

Growth Strategy

Growth will be achieved through 'granularization' of the portfolio, focusing on 98% retail assets. Key strategies include the expansion of the Gold Loan business (acquired PMFL's INR 1,350 Cr book), scaling 'Project Cyclops' for automated underwriting, and leveraging a 2.6 Cr customer base for cross-selling via the PLANET App.

Products & Services

Two-wheeler loans, tractor loans, home loans, microfinance (Rural Business Finance), personal loans, loan against property (LAP), SME finance, and gold loans.

Brand Portfolio

L&T Finance (LTF), PLANET App (digital platform).

New Products/Services

Launched Warehouse Receipt Financing (WRF) which saw 55% growth. Also expanding into Gold Loans via the acquisition of Paul Merchants Finance's business in June 2025.

Market Expansion

Acquired 130 branches and ~700 employees from Paul Merchants Finance to rapidly scale the gold loan portfolio in new geographies.

Market Share & Ranking

LTF is a leading retail NBFC with a strong market position in tractor and two-wheeler financing, though specific market share percentages are not provided.

Strategic Alliances

Strategic linkage with parent L&T, which provides brand equity, management oversight, and a line of credit for contingencies.

🌍 External Factors

Industry Trends

The industry is seeing a slowdown in unsecured retail segments. LTF is positioning itself by shifting toward 'risk-resilient' customer segments (Prime and Super Prime) which now make up a significant portion of their onboarding distribution.

Competitive Landscape

Competes with other large NBFCs and private banks. LTF differentiates through its 'tech-first' approach and deep rural distribution.

Competitive Moat

The primary moat is the 'L&T' brand and parentage, which ensures a steady capital supply and lower borrowing costs (6.9%). This is sustainable as long as L&T maintains its 66.2% majority stake and strategic interest.

Macro Economic Sensitivity

Highly sensitive to rural consumption trends, as 45% of the portfolio (Farmer and Rural Business Finance) depends on rural economic health.

Consumer Behavior

Increasing shift toward digital borrowing; LTF's PLANET App and digital integration in sourcing and servicing address this trend.

Geopolitical Risks

Minimal direct impact, but global inflationary pressures could influence domestic interest rates and borrowing costs.

⚖️ Regulatory & Governance

Industry Regulations

Operates under the NBFC-ICC license (received August 2024) and must comply with RBI's scale-based regulations for NBFCs. The company successfully completed a merger of its subsidiaries in Dec 2023 to simplify its regulatory structure.

Environmental Compliance

LTF has committed to carbon neutrality by 2035. In FY25, it avoided ~12,675.67 tCO2e by financing over 64,000 Two-Wheeler EVs.

⚠️ Risk Analysis

Key Uncertainties

Asset quality remains a monitorable risk; Gross Stage 3 (GS-3) assets stood at 3.31% in June 2025. A deterioration in asset quality leading to higher credit costs could impact the 2.4% RoMA.