- Highest-ever Yearly PAT: INR 2,320 crores, a growth of 43% YoY.
- Q4 Disbursements Growth: 33% YoY and 4% sequentially over Q3.
- Retailization: 94% in Q4 FY24, target of 95% by FY26.
- Retail Growth: 31% YoY in Q4 FY24.
- Consolidated GS3 and NS3: 3.15% and 0.79% respectively at the end of FY24.
- Consolidated Q4 FY24 RoA: 2.19%.
- Annual FY24 RoA: 2.32%.
- Highest-ever Annual Retail Disbursements: INR 54,267 crores, a growth of 29% YoY.
- Highest-ever Quarterly Retail Disbursements: INR 15,044 crores, a growth of 33% YoY.
- Retail Book: INR 80,037 crores, up 30% YoY.
- Provision Coverage Ratio: 76%, up from 59% last year.
- Consolidated NIM plus Fee: 11.25% for Q4 FY24.
- Consolidated PAT for Q4 FY24: INR 554 crores, up 11% YoY.
- Consolidated Return on Assets (RoA): 2.19%, up 29 bps YoY.
- Consolidated Return on Equity (RoE): 9.53%, up 16 bps YoY.
- Consolidated PAT for FY24: INR 2,320 crores, up 43% YoY.
- Consolidated NIM plus Fee for FY24: 10.67%.
- Consolidated RoA for FY24: 2.32%, up 79 bps YoY.
- Consolidated RoE for FY24: 10.35%, up 256 bps YoY.
- Rural Business Finance Quarterly Disbursements: INR 5,768 crores, up 31% YoY.
- Rural Business Finance Annual Disbursements: INR 21,500 crores, up 27% YoY.
- Farmer Finance Book Size: INR 13,892 crores, growth of 8% YoY.
- Urban Finance Quarterly Disbursements: 32% YoY jump.
- Urban Finance Annual Disbursements: 22% YoY jump.
- Urban Finance Book Size: INR 36,089 crores, growth of 30% YoY.
- Two-Wheeler Business Quarterly Disbursements: INR 2,502 crores, up 45% YoY.
- Two-Wheeler Business Book Size: INR 11,205 crores, up 25% YoY.
- Personal Loans Quarterly Disbursements: INR 968 crores.
- Personal Loans Book Size: INR 6,440 crores, up 18% YoY.
- Retail Housing Quarterly Disbursements: INR 2,513 crores, up 70% YoY.
- Retail Housing Book Size: INR 18,000 crores, up 38% YoY.
- SME Finance Quarterly Disbursements: INR 1,213 crores.
- SME Finance Book Size: INR 3,905 crores.
Release Date: April 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- L&T Finance Ltd (BOM:533519, Financial) achieved its highest-ever yearly PAT of INR2,320 crores, a growth of 43% YoY.
- The company maintained a strong trajectory in Q4 disbursements, ending with an overall disbursements growth of 33% YoY.
- Retail book crossed the INR80,000 crores milestone, currently at INR80,037 crores, up 30% YoY.
- The provision coverage ratio improved to 76%, up from 59% during the same period last year.
- The company has successfully reduced its on-book wholesale portfolio from INR38,058 crores to INR5,528 crores by the end of Q4 FY24.
Negative Points
- Consolidated RoA for Q4 FY24 stood at 2.19%, which is below the Lakshya 2026 target range of 2.8% to 3%.
- The ongoing weakness in rural demand is likely to spill over to H1 FY25 due to uneven monsoonal rains and a decline in crop output.
- Access to funding at competitive rates and tight liquidity conditions remain challenges for the NBFC sector in FY25.
- The company has created additional prudential provisions of INR721 crores to address potential sequence risks in the SR portfolio.
- Despite improvements, the consolidated GS3 and NS3 levels stood at 3.15% and 0.79%, respectively, which are above the targeted thresholds.
Q & A Highlights
Q: This exercise of re-evaluating the SRs and the provisions that we took on it, will this keep on happening once a year or once a quarter? What will be the frequency of this exercise?
A: As of now, we have done it this quarter. We will re-evaluate the SR portfolio with every passing quarter. The provision taken should be sufficient to smoothen out any sequence risk during the resolution process. (Sudipta Roy, CEO)
Q: On the credit cost that, in FY24, we ended up with roughly INR2,000 crores of credit cost on the retail portfolio. Do you see credit costs inching up for FY25?
A: We are working on keeping our credit costs on a downward trajectory. We are hopeful that normal monsoons will aid in improving our credit metrics going forward. (Sudipta Roy, CEO)
Q: Competition is still very high. Are there signs that this competition is cooling off?
A: Competition remains strong, but we are confident of dealing with it through our investments in technology, processes, and granular presence across the country. (Sudipta Roy, CEO)
Q: You mentioned that you have a 55% PCR on SRs. Is that what you mentioned?
A: Yes, that's right. The total SR book's net EAD was INR15,000 crores, and we have provided INR8,300 crores, resulting in a PCR of 55%. (Sachinn Joshi, CFO)
Q: On the customer acquisition number that you have given, the 6.8 lakh that you have done during the quarter. How does it divide between rural and urban?
A: Approximately 55% is coming from our rural businesses and about 45% is coming from our urban businesses, primarily driven by two-wheelers and rural group loans and microfinance. (Sudipta Roy, CEO)
Q: On the personal loan side, if you can clarify some breakup between what part is your cross-selling to your own customers and how the trend over the quarters has been with the fintech partnership?
A: 60% of our personal loans are disbursements to our own existing customers. The remaining is from channel originated new-to-organization customers through e-aggregators and DSA distribution model. (Sudipta Roy, CEO)
Q: How do you see the cost to income ratio moving given the geographic expansion and business expansion?
A: We aim to manage the overall OpEx plus credit cost within the range of 7% when it comes to cost to book. Investments in technology, people, and setting up new businesses will continue. (Sachinn Joshi, CFO)
Q: Would we want to have a revised target for Lakshya 2026, or will we stay with this and just improve the quality within this framework?
A: We would like to stay within this framework and improve the predictability of earnings and AUM growth. We remain focused on executing the five-pillar strategy. (Sudipta Roy, CEO)
Q: On the MFI piece, are we anticipating a rate cut given the informal mandate from RBI?
A: We have maintained the same rate for almost six years and plan to follow the same trajectory going forward. (Sudipta Roy, CEO)
Q: On the SR provisions, is there any underlying risk even on the on-book infra portfolio?
A: The provisions were taken as an illiquidity discount to accelerate the sell-down of the wholesale book. The SR investments have been fair valued, and the provisions are to address sequence risk. (Sachinn Joshi, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
